Over the past couple of weeks several deals aimed at expanding Egypt’s renewable energy production have been concluded.
Earlier this week Egypt’s Minister of Electricity and Renewable Energy, Mahmoud Esmat, oversaw the signing of a cooperation agreement to localise the manufacturing of solar cells and photovoltaic modules during a visit to China.
The agreement, signed between Kemet for Industries, the executive arm of the United Egypt Group for National Industries, and China’s Suzhou Witsen, a subsidiary of the GCL Group, provides for the establishment of an integrated industrial complex with a production capacity of five gigawatts and covering 280,000 square metres at a total investment cost of $500 million.
The project includes technology transfer, increased local value-added, capacity building, and technological innovation.
Esmat said the project supports Egypt’s goal of becoming a regional hub for renewable energy equipment manufacturing.
Kemet Industries also signed a cooperation agreement with Chinese technology firm Cornex New Energy to establish a $200 million energy storage battery plant in Egypt, using locally sourced raw materials and components.
The plant is expected to have an annual production capacity of 5,000 megawatt-hours.
The deals come on the tail of two other major projects. Last week, Egypt signed renewable energy deals worth a total investment amount of $1.8 billion with Norwegian renewable energy developer Scatec and Sungrow Power Supply, one of China’s leading new energy companies.
Scatec will establish a large-scale solar power plant in the Minya governorate equipped with battery energy storage systems. Meanwhile, Sungrow will construct a battery energy storage equipment manufacturing facility in the Suez Canal Economic Zone.
Last week also saw the inauguration of the first phase of Scatec’s Obelisk solar power project in Nagaa Hammadi in Qena governorate, a $600 million investment.
Egypt’s Integrated Sustainable Energy Strategy targets 42 per cent of renewables in the country’s energy mix by 2030. According to energy expert Ali Habib, renewables currently account for around 10 to 12 per cent of electricity generation.
He believes agreements to manufacture batteries for energy storage are important because this is critical to the flexibility of the energy generation system.
“The unutilised energy can be stored and used at night, saving fossil fuel consumption,”
he said, adding that battery manufacturing is feasible domestically, given Egypt’s existing car battery production expertise.
According to Habib, Egypt’s effective renewable options are solar and wind, with hydropower being increasingly contested. He noted that “the Aswan High Dam is important for Egypt for water security, not energy security.”
The energy used to produce fertilisers, made necessary by the dam’s environmental impact, weakens its renewable credentials, he noted.
Until the early 2000s, Egypt relied almost entirely on fossil fuels, especially gas, for electricity generation.
This was not a failure of the electricity sector but was owing to “the vision of the state”, which assumed long-term gas abundance, Sabah Mashaly, deputy minister of electricity and renewable energy, said during a seminar organised by the Egyptian Centre for Economic Studies (ECES), a think tank, this week.
When gas shortages emerged, the lack of a diversified energy mix led to the load-shedding experienced in 2015. “There is no country that needs security of supply that bases its production on one source,” Mashaly said.
Egypt adopted a national energy strategy in 2014, updated later, that aimed at integrating renewables into the energy mix. Large areas of land were allocated for renewable projects, supported by a wind and solar atlas identifying technically viable sites.
Mashaly explained that renewable energy development requires a careful choice of sites. Too much wind can damage turbines, and too little wind reduces economic viability, for example, she said.
The private sector was brought in because “the state could not afford all the investment necessary,” she said, but it will be the entity that will purchase the energy generated by these facilities.
Mashaly said that the Benban Solar Park in Aswan in Upper Egypt marked a turning point, attracting 32 international investors backed by major global financial institutions.
She said that at the outset the prices paid to investors for energy generated were high due to the high country risk at the time. Prices fell gradually in later phases of the project.
According to Mashaly, the price of renewable energy should not be judged by generation costs alone. “What is more important than producing solar energy is how you can use it in the network without problems. High renewable penetration requires investments in grids, balancing, and stability services,” she said.
Habib agreed. “The cost of renewable energy is not just the generation, but also the cost of the network,” he said. A system dominated by solar and wind requires a resilient, flexible grid capable of handling sudden drops in output, often at higher cost than the power plants themselves, he explained.
While acknowledging the importance of renewable energy, Mashaly stressed that “neither rich nor poor countries can rely only on renewable energy.”
She explained that high renewable penetration creates risks of instability and sudden drops of supply. She pointed to the example of blackouts in Spain, Portugal, and part of France linked to renewable integration in 2025.
Mashaly also spoke of the importance of Egypt’s investments in nuclear energy production. The first unit of the Al-Dabaa nuclear project with a capacity of 4,800 megawatts (MW) is scheduled to become operational by the end of 2028, and full completion of the project is set for 2030, she said.
While nuclear energy may not be renewable, it produces low-carbon fuel. Nuclear energy also “brings stability to the power grid, especially with high renewable penetration.”
Recognising that nuclear projects are expensive, Mashaly said they were essential for this long-term balance. Al-Dabaa is being implemented at an investment of around $25 billion. She said Egypt is also studying small reactors, mini reactors, and floating reactors in order to diversify its generation of nuclear energy.
She noted that some European countries are reassessing their policies on nuclear-energy generation, especially given the continued reliance on coal.
She also addressed the issue of green hydrogen in her remarks at the ECES meeting. “Egypt may be the only country in the region with five green-hydrogen projects producing on the ground,” she noted
Egypt, like many other countries, has signed numerous memoranda of understanding (MoUs) on green hydrogen, she pointed out, but these had proved unrealistic. It now focuses on real, implementable projects, mostly private-sector led, she said.
Noting that Egypt had opted for a pragmatic solution by enabling direct renewable-to-hydrogen connections for these projects as full-grid integration would require enormous investment in the grid, she highlighted the difficulty of investors acquiring green certificates if facilities are getting their energy from a grid that includes green and non-green energy supplies.
Green hydrogen is not an energy source but an energy carrier, Habib explained, and it is produced using renewable power. It is mainly valuable as a storage and industrial input.
Hydrogen is important for ammonia production, which is used in the manufacture of fertiliser.
He noted that green-hydrogen projects do not count towards national renewable targets due to the principle of additionality.
“If it [green hydrogen] uses existing renewable energy, it will have to be compensated with fossil fuels, which does not help decarbonisation,” he explained.
Renewables are currently more viable than hydrogen, which depends on long-term offtake agreements that buyers hesitate to commit to, he said.
According to Habib, theoretically Egypt has the potential to be fully powered by renewable energy, but “expanding renewables risks underutilising existing thermal capacity, creating stranded assets that still require maintenance and financing.”
* A version of this article appears in print in the 22 January, 2026 edition of Al-Ahram Weekly
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