EGYPT: An introduction to Projects & Energy

Over the past year, Egypt has made remarkable strides in the energy and infrastructure sectors, particularly in renewable energy and Power-to-X (PtX) projects. As part of its long-term strategy to diversify its energy mix and enhance sustainability, the country is leveraging its abundant solar and wind resources, advancing large-scale green hydrogen projects, and reforming its regulatory framework to attract foreign investments.

Renewable Energy Growth

Egypt is positioning itself as a regional leader in renewable energy, with a strategic target of generating 42% of its electricity from renewable sources by 2030. The country's solar and wind power capacities have seen substantial growth, with wind energy projects totalling 2.2 GW and solar energy reaching 2.5 GW in early January 2025. Hydropower remains a steady contributor to the electricity mix, providing 2,832 MW (https://nrea.gov.eg/Technology/SolarThermal).

Among the most notable renewable energy projects developed in the country in recent years is the Benban Solar Park in Aswan, which is one of the world’s largest photovoltaic solar power installations, with its a total capacity of 1,650 MW. To support grid stability, Egypt is also investing in energy storage solutions, with battery storage projects under development for the first time to balance intermittent renewable supply. In the wind sector, Egypt is progressing on a fast-track with mega-projects that are under development along the Gulf of Suez by large international and local renewable energy players.

Power-To-X Initiatives

Egypt is a frontrunner in deploying PtX technologies, with a strong focus on green hydrogen and ammonia production. Given its strategic geographic location, the country is well-positioned to become a major exporter of green hydrogen and its derivatives to Europe and the world.

Key projects in the Suez Canal Economic Zone (SCZone) area include:

• Scatec-led Consortium’s green hydrogen plant launched in Ain Sokhna, with a planned 100 MW electrolyser powered by 260 MW of solar and wind power. Upon full completion, the plant will produce approximately 13,000 tonnes of renewable hydrogen and up to 74,000 tonnes of renewable ammonia annually.
• Globeleq’s 3-phase project, totalling 3.6 GW of electrolysers and around 9 GW of solar PV and wind power generation. The first phase of the project is intended to involve a pilot project using a 100 MW electrolyser, and will initially focus on green ammonia fertilisers, while considering other end-uses of green hydrogen in the medium and longer term, including green fuels.
• Voltalia and Taqa Arabia’s new green hydrogen production facility with a capacity of 15,000 tonnes per year, through a 100 MW electrolyser supplied with 283 MW of renewable power. The project is intended to be expanded to 150,000 tonnes per year of green hydrogen with an electrolyser capacity of up to 1 GW supplied by 2.7 GW of solar and wind power.

Regulatory and Policy Developments

Egypt has taken significant steps to establish a regulatory framework that promotes renewable energy development and attracts private investment. The cornerstone of these regulations is the Renewable Energy Law no. 203/2014, which sets forth the framework for private sector participation in renewable energy projects, including feed-in tariffs, competitive bidding, and independent power producer (IPP) schemes. Coupled with the Electricity Law no. 87/2015, which seeks to reform and liberalise the Egyptian electricity market, this legislation body forms the legal basis for all renewable energy projects in the country.

The Egyptian Electricity Transmission Company (EETC) has been playing a pivotal role in negotiating and structuring power purchase agreements (PPAs) with renewable energy developers, as Egypt had in recent years shifted from feed-in tariff mechanisms to competitive tenders to reinforce cost efficiency in the procurement of renewable energy. The New and Renewable Energy Authority (NREA) also continues to play a vital role in land allocation for renewable energy projects, ensuring developers have access to suitable sites with excellent solar and wind resources and eased allocation requirements.

These policies and initiatives reflect Egypt’s commitment to creating an investor-friendly renewable energy landscape. The Green Hydrogen Projects Incentives Law no. 2/2024 also provides clarity on incentives and approvals, streamlining foreign direct investment in the PtX sector, offering tax rebates of 33% up to 55% for eligible projects and VAT exemption on equipment, machinery, and supplies, and facilitating approvals for green hydrogen and derivatives projects.

Challenges to Energy Supply

Despite significant progress, Egypt continues to face energy and water supply challenges. This is especially noticeable in respect of natural gas. In mid-2024, declining domestic gas production, coupled with increased electricity demand, led to temporary power shortages.

The government responded by resuming liquefied natural gas (LNG) imports and accelerating investment in gas exploration projects and the charter of floating storage and regasification units (FSRU) to stabilise supply. Egypt has also been expanding its energy mix with nuclear power. The country’s prominent nuclear project, El Dabaa Nuclear Power Plant, is currently under construction, with Russia’s Rosatom as the main contractor. The plant is planned to have a total capacity of 4.8 GW, consisting of four reactors. The first reactor is expected to be operational by 2028, with the remaining units coming online by 2030.

Another pressing issue is the financial sustainability of energy projects in Egypt. EGP depreciation and high inflation have placed financial pressures on large-scale infrastructure developments, while delays in supply chain logistics and fluctuating global commodity prices have impacted the development timelines of several projects in the country. Renewable energy developers continue to seek creative financial solutions to mitigate cost risks, such as Scatec’s issuance of 19-year USD334.5 million non-recourse Green Project Bonds to refinance its 380 MW projects in Benban.

Future Outlook and Opportunities

Looking ahead, Egypt’s energy sector is expected to witness continued expansion, driven by ambitious renewable energy targets, a supportive regulatory environment, and international collaboration. Key trends shaping the sector include:

• Hydrogen-to-Ammonia conversion: Several developers are investing in facilities to produce green hydrogen and convert it into green ammonia for export. Green certification of the products is a key challenge, which has yet to be clarified.
• Electricity interconnection initiatives: Egypt is strengthening its role as an energy hub with plans to expand electricity interconnections with neighbouring countries.
• Increased private sector participation: Policy reforms are encouraging more private sector investment in renewable energy, particularly in solar installations for industrial consumers. The Egyptian Electric Utility and Consumer Protection Regulatory Agency (EgyptERA) has been instrumental in putting forward a private-to-private (P2P) energy initiative aiming to boost the commercial and industrial (C&I) renewable energy market, enabling large-scale consumers to secure green electricity at competitive prices by entering into bilateral power purchase agreements with private producers and wheeling electricity on the national grid, thereby reducing dependency on State-subsidised electricity. This is of particular interest to electricity consumers in the manufacturing, real estate, and tourism sectors that are bound by decarbonisation targets.

Conclusion

Egypt's energy transition is accelerating, with renewables and Power-to-X projects playing a central role in shaping the country’s future energy landscape. With a strong government support through the Supreme Energy Council and the National Council for Green Hydrogen, and a commitment to sustainability, Egypt is on track to growing its pipeline of renewable and PtX projects to become a key player in the global energy market. While challenges remain, the country’s proactive approach and strategic investments will be instrumental in securing long-term energy supply and economic resilience. Alignment with other countries and trading blocks in respect of import/export rules for green commodities will be key for achieving the country’s energy export objectives.