As the world grapples with the pressing challenges of climate change and the need for sustainable energy solutions, Egypt stands at a pivotal crossroads in its energy landscape. With an abundance of natural resources, particularly solar and wind, the country is poised to emerge as a leader in renewable energy production in the region. The Egyptian government has recognized the importance of transitioning to a greener energy economy, implementing policies and incentives designed to attract both domestic and foreign investments.
Egypt’s Renewable Energy Transformation
The current energy landscape in Egypt is characterized by a significant transformation aimed at enhancing energy security, promoting renewable energy, and achieving decarbonization. This comes as the country’s energy strategy until 2040 aims to boost renewables contribution in its energy mix to become 60%, according to a report submitted to Mahmoud Ismat, Minister of Electricity and Renewable Energy, on November 1st, 2024.
Egypt’s renewable energy drive has attracted significant investment, especially in solar and wind power. The Egyptian government has implemented a comprehensive incentive framework to accelerate the adoption of renewable energy. These incentives encompass tax benefits, exemptions from customs duties, and favorable feed-in tariffs. By alleviating the financial burden on developers, these measures significantly improve the economic feasibility of renewable energy projects.
In addition to domestic endeavors, Egypt has actively pursued international collaborations and agreements to advance its renewable energy sector. These partnerships provide access to cutting-edge technology, financial resources, and global best practices, significantly enhancing the scope and impact of Egypt’s renewable energy initiatives.
Accordingly, the Egyptian energy sector is developing a number of solar, wind, and hydropower generation projects. One of the major renewable projects in Egypt is the Benban project, Africa’s largest solar park. The project consists of forty solar power stations, each producing 50 megawatts, with a total production of 2,000 megawatts. These stations produce approximately 90% of the High Dam’s production, according to previous statements by Hani Mostafa, general coordinator of the solar energy project in Benban.
The 580 MW Gabal El Zeit Wind Farm is another significant project. The first phase, comprising 120 turbines with a 240 MW capacity, has been partially connected to the grid. The second phase, with 110 turbines and a 220 MW capacity, is also under development, according to the Egyptian Presidency website.
Egypt’s Green Hydrogen Ambitions
Egypt has an ambitious plan to become a leading producer and exporter of green hydrogen. This target aligns with the global shift towards decarbonization and the increasing demand for renewable energy solutions. By leveraging its abundant solar and wind resources, Egypt aims to utilize green hydrogen to significantly reduce carbon emissions in transportation, industry, and power generation, thereby contributing to its 2040 renewable energy targets.
Rania Al-Mashat, Minister of Planning, Economic Development, and International Cooperation, emphasized the transformation of the Suez Canal area into a leading hub for green hydrogen production. By 2050, Egypt aims to supply 10% of the global hydrogen demand, positioning the country at the forefront of the low-carbon energy economy. Al-Mashat’s statement came during her participation in a panel discussion at the COP29 Climate Summit held in Azerbaijan from November 11-22, 2024.
Despite the significant potential of Egypt’s hydrogen sector, several challenges hinder investment. High financing costs, driven by factors like external debt, and inflation, pose a significant barrier, particularly for capital-intensive hydrogen projects. Additionally, the substantial upfront investment required for renewable energy infrastructure exacerbates the financial burden, according to the British Egyptian Business Association (BEBA). The International Energy Agency (IEA) revealed that a mere 9% increase in the cost of capital can lead to a substantial 70% rise in green hydrogen production costs. To mitigate these risks and attract investment, the Egyptian government is actively partnering with international organizations such as the European Bank for Reconstruction and Development (EBRD) to develop innovative financing solutions that combine public and private funding.
As Egypt embarks on its ambitious journey towards a sustainable energy future, the country’s commitment to renewable energy and green hydrogen initiatives positions it as a key player in the global energy transition. By harnessing its abundant solar and wind resources, Egypt can not only reduce its reliance on fossil fuels, but also contribute significantly to global efforts to combat climate change. Despite funding challenges, strategic partnerships along with innovative financing mechanisms and continued policy support can help Egypt unlock its full potential and solidify its place as a leading renewable energy hub.
