Egypt seeks to unlock renewable riches to power regional clean energy hub

After the US-Iran war caused energy prices to soar, ballooning Egypt’s energy import bill, the government has doubled down on plans to boost renewable energy in the country’s power mix – part of its broader plan to become a clean energy export hub for the region.

With abundant sunshine, swathes of unused desert land and plenty of wind, Egypt is seen as having the potential to become a major force in renewable power generation, helping to cut the planet-heating carbon emissions of Africa’s second-largest economy and beyond.

The conflict in the Middle East has given the government’s clean energy plans more salience, making the case for renewable power to bolster the country’s energy security and help it meet its economic development goals by exporting clean power.  

The government recently announced an accelerated timeline for renewables to reach 45% of the electricity mix within two years – up from a previous target of 42% by 2030 and a huge jump from around 13% in 2025, according to think-tank Ember. 

After the US-Iran war caused energy prices to soar, ballooning Egypt’s energy import bill, the government has doubled down on plans to boost renewable energy in the country’s power mix – part of its broader plan to become a clean energy export hub for the region.

With abundant sunshine, swathes of unused desert land and plenty of wind, Egypt is seen as having the potential to become a major force in renewable power generation, helping to cut the planet-heating carbon emissions of Africa’s second-largest economy and beyond.

The conflict in the Middle East has given the government’s clean energy plans more salience, making the case for renewable power to bolster the country’s energy security and help it meet its economic development goals by exporting clean power.  

The government recently announced an accelerated timeline for renewables to reach 45% of the electricity mix within two years – up from a previous target of 42% by 2030 and a huge jump from around 13% in 2025, according to think-tank Ember. 

In June, President Abdel ​Fattah el-Sisi met with government ministers to discuss the faster delivery of solar and energy storage projects as well as upgrades to the electricity grid to deliver on the new goal, including 105 renewable energy projects intended to bolster grid stability. 

Big challenges lie ahead, among them a parallel bet on continued fossil fuel exploration and the need to upgrade electricity infrastructure, a task that could require multibillion-dollar investments, experts say.

“The technical and financial plumbing – the grid, foreign-currency financing and the supply chain – are the real gatekeepers,” Nadia Elmasry, an expert at the Regional Center for Renewable Energy and Energy Efficiency, told Climate Home News.

In a speech to the nation in March, President Sisi said $50 billion worth of investment were needed to overhaul the electricity grid and transmission infrastructure. 

During the COP29 climate talks in 2024, Prime Minister Mostafa Madbouly warned that Egypt’s targets for renewable power expansion could be missed without more international support for critical infrastructure. 

Multimillion-euro investment

Modernising and expanding power grids has emerged as a central pillar of an intensifying global push for electrification – a key priority of the COP31 UN climate talks taking place in Türkiye in November.  

As dozens of governments led by the European Union and the UK throw their political weight behind a rapid electrification of the global economy, Egypt’s hunt for foreign investment in power infrastructure has found sympathetic ears.

In June, the EU and its European Investment Bank lending arm announced a financing package of up to €690 million ($795 million) to modernise Egypt’s transmission network – widely seen as a weak point in the nation’s clean energy ambitions. 

The project aims to help the grid absorb 22 GW of renewable capacity by 2030, reduce electricity losses and move power from wind and solar zones to consumers and, eventually, foreign markets, including the EU. 

New substations and transmission lines will connect wind and solar zones around the Red Sea and the Gulf of Suez, reducing losses and preparing the network for future cross-Mediterranean trade.

Under the country’s ambitious regional plans, Egypt would supply clean power via existing interconnections with Jordan, Libya and Sudan, as well as a 3 GW link under construction with Saudi Arabia. 

Further ahead, proposals envision the export of renewable electricity to southern Europe via a subsea cable, and Egypt also aims to be a primary source of green hydrogen and ammonia for European markets.

Conflicts, cash among the challenges

Planned investment in electricity and renewables reached 136.3 billion Egyptian pounds ($2.7 billion) for the 2025/26 financial year, up from 72.6 billion pounds ($1.4 million) the year before, with public investment expected to account for about three-quarters of that.

Grid investment is “the cornerstone” of Egypt’s hub strategy, said energy and environmental economy expert Mohammed Abdel Raouf, allowing it to integrate renewables without destabilising the power system and create the smart-grid infrastructure needed to trade electricity with other countries.

But Egypt’s plans face several major challenges, besides the necessary grid upgrades, which are estimated to cost billions of dollars alone, according to a December 2025 study by the Amsterdam-based think-tank Transnational Institute. 

Regional conflicts are disrupting supply chains and discouraging investment, particularly in renewable energy, Abdel Raouf warned. High borrowing costs, financing rules, limited EU-compliant capacity and uncertain long-term buyers of Egypt’s clean power could also slow progress, according to the Transnational Institute study.

The Arab world’s most populous country has been grappling with the aftermath of a steep currency devaluation and economic fallout from the Gaza and Iran wars.

Elmasry pointed to pressures from Egypt’s shortage of foreign currency and the need for concessional finance or guarantees to make long-term projects bankable. Egypt says it has mobilised $4 billion in concessional finance for 4.2 GW of renewable energy projects.

Regulatory coordination and workforce development will be essential, particularly as Egypt seeks to trade across grids governed by different technical and commercial rules, Elmasry added.

In order to generate an exportable surplus of clean electricity at a time of rising domestic power needs, Egypt also needs to give a bigger role to decentralised minigrid systems such as rooftop solar projects, said Cairo-based solar entrepreneur Hatem Tawfik.

“We will [only] be a hub in 2040 after we produce more than we need,” said Tawfik, co-founder and managing director of Cairo Solar, a solar engineering, procurement and construction company, calling for cheaper loans and simpler permitting and grid-connection rules. 

For Tawfik, such small-scale projects are also fundamental to the government’s goal of shoring up energy security to avert crises like that of 2023/2024, when Egypt’s falling gas output contributed to rolling blackouts during sweltering heatwaves. 

At a time of heightened geopolitical uncertainty in the Middle East, this is even more urgent. 

“In the event of war, or if a country such as Israel, which supplies 40-60% of Egypt’s [imported] gas, suddenly cut off supplies [again], Egypt would be less vulnerable,” he told Climate Home News. 

Home-grown batteries

Storage could determine whether Egypt’s renewable power is merely abundant at midday or commercially valuable around the clock.

“Storage is what turns intermittent renewables into firm, exportable power,” said Elmasry.

In January, Norwegian developer Scatec signed a 25-year power purchase agreement with the Egyptian Electricity Transmission Company for 1.95 GW of solar and 3.9 GWh of battery storage.

Demand for more storage has also raised the prospect of Egypt developing a domestic battery industry.

Chinese company Sungrow plans to build a battery-storage-system factory in Ain Sokhna, its first in the Middle East, with annual production capacity of 10 GWh and operations scheduled to begin in April 2027. It will provide the batteries for Scatec’s energy storage project. 

Egypt has also granted licences for two battery-storage projects in Aswan and Suez worth a combined $800 million. Huawei and Egyptian company AIS have meanwhile signed an agreement to explore local production of grid-forming battery systems.

At the same time, Egypt is conducting an aerial geophysical survey in search of critical minerals across six regions, a first in about half a century. 

Still, Mohamed Gamal Kafafy, president of the World Green Economy Council, said competing directly with China would be unrealistic, suggesting Egypt should instead manufacture under Chinese licences or through joint ventures, reducing imports while building local skills.

The Ministry of Electricity did not respond to Climate Home News’ request for comment. 

Mixed messages?

The government’s climate investment programme aims to add 10 GW of renewable capacity and retire 5 GW of inefficient fossil-fuel generation by 2028, but Egypt is not turning its back on oil and gas.

President Sisi told energy companies attending the Egypt Energy Show in March to pursue a double strategy – intensifying efforts to explore and increase oil and gas production while also accelerating investment in renewable energy. The Petroleum Ministry plans to drill about 480 exploratory oil wells over five years.

The risk, Tawfik said, is that a large oil or gas discovery reduces the incentive to focus on investment in renewables.

“When a major oil or gas discovery, such as the Zohr gas field, leads to overconfidence, it reduces the focus on renewable energy,” he said, noting that renewable project rollouts largely stagnated after the completion of the giant Benban solar park in 2019. 

But major developments such as the El Dabaa nuclear plant and the Abydos solar and energy-storage project demonstrate that significant work is already under way to meet Egypt’s clean energy hub ambitions, Tawfik said.

“Simply implementing the existing plans would be an excellent outcome,” he added.

Main image: The Sharm El Sheikh solar power plant in Egypt (Photo:
Hassan Allam Utilities)