With the war on Iran revealing how vulnerable oil and gas supplies are to global shocks and geopolitical risks, Egypt is revisiting plans to increase its dependence on renewables in its energy mix.
A mid-May ministerial meeting headed by Prime Minister Mustafa Madbouli highlighted this shift by revealing plans to launch an initiative enabling factories to generate solar energy on their roofs and use it for production, optimising the use of resources and reducing the imports bill.
The ambitious programme aims to convert the roofs of 7,000 factories, representing about 10 per cent of Egypt’s industrial base, into decentralised solar plants capable of generating a combined 1,000 MW (one gigawatt) of clean energy.
The announcement came on the heels of Madbouli’s April statement that the solar transition is a paramount state priority, saying that the government wants to incentivise factories and homes to generate solar power and link it to the national grid.
Anchored by Egypt’s exceptional sunlight and the promise of competitively priced electricity, solar power has emerged as a defining pillar of the country’s renewable energy expansion. Over the past decade, landmark projects such as the Benban Solar Park, coupled with regulatory reforms that have drawn in private investment, have transformed solar energy from being a marginal contributor to the energy mix into a central force.
In 2015, solar accounted for just 0.3 per cent of renewable output. By 2019, its share had surged to 7.6 per cent, reflecting steady progress. In 2020, solar’s contribution had surged to 18.7 per cent. By 2024, the share had climbed further to 22.8 per cent, underscoring how rapidly solar has shifted from the periphery to the core of the energy mix.
Under recent directives from the Supreme Council of Energy (SCE), new factories are required to secure 25 per cent of their operational energy needs from renewable sources, effectively embedding the green transition into the industrial licensing framework.
“Placing the emphasis on solar power is one of the most sensible medium-term responses to limited gas supplies because it reduces the gas burn in power generation, lowers peak demand, and can help factories manage energy costs,” expert Aly Metwally told Al-Ahram Weekly.
While electricity generation corners the largest part of natural gas consumption in Egypt at 60 per cent, 20 to 25 per cent of this also goes to industry.
A core motivation behind the 7,000-factory initiative is the need to comply with international carbon regulations, particularly the European Union’s Carbon Border Adjustment Mechanism (CBAM), said Osama Kamal, head of the Senate’s Energy Committee and a former petroleum ministry, in an interview with CNN Business Arabic.
He explained that Egyptian exporters now face strict external constraints in that they must verify that they are actively reducing their carbon emissions or face crippling border tariffs.
“The government’s strategy is to proactively align industrial energy consumption with these international mandates by helping factories transition part of their power to clean solar energy. This shift is critical: failing to decarbonise would effectively block Egyptian goods from key markets, creating an economic bottleneck that would paralyse industrial operations far more severely than any standard power outage,” Kamal said.
The initiative is designed such that each factory will install a modest solar setup with an average capacity of 150 kilowatts, though bigger factories with more roof space can install larger systems.
According to Kamal, this average size makes connecting to the national grid simple and secures stable supplies. Under Egyptian law, any solar system with a capacity of under 500 kilowatts is fast-tracked, and factories can just plug in and go without needing special permits.
Anyone installing a system with capacities larger than 500 kilowatts (half a megawatt) must undergo strict technical reviews and get formal approvals. “This is because small systems do not create noticeable fluctuations in the national power grid,” Kamal said.
The main challenge with large solar setups is weather volatility. If clouds block out the sun, then large-scale solar installations experience an immediate drop in power, with this then surging back once the sun reappears. Abrupt spikes and drops of this sort, called fluctuations, can destabilise the power grid, but they are minimal for systems with low capacities.
The new initiative, dubbed Industry Sun, will add roughly one megawatt of capacity to the grid. “This is not enough to solve Egypt’s energy gap alone, but it is meaningful if implemented well because industrial and commercial users can reduce daytime grid demand and lower exposure to future tariff increases,” Metwally said.
While noting that the initiative could reduce pressure on the grid at peak demand times and lower industrial energy costs, Racha Helwa, a former advisor to the minister of investment, cautioned that there are implementation risks including financing costs, roof suitability, grid-connection approvals, net-metering rules, equipment quality, maintenance capacity, and whether smaller factories can manage collateral and repayment requirements.
In parallel to the new initiative, Banque Misr, Egypt’s second-largest public-sector bank, had announced it will be offering solar panel loans to finance the costs of installing panels in residential units.
According to the bank’s website, it is offering financing of up to 100 per cent of installation costs, with loans ranging from LE6,000 to LE250,000, repayment terms from six months to 96 months, and rates starting at 23 to 25.5 per cent annually.
Helwa praised the initiative, as it removes upfront cost barriers. But “those same figures also show the constraints: high interest rates and income requirements mean uptake may be limited to middle- and upper-income households unless concessional finance, guarantees, or targeted support are added,” she said.
Metwally said that rooftop solar installations would scale faster if financing is accessible, reasonably priced, and simple to apply for.
He said that expanding decentralised solar power generation faces many obstacles, including financing costs, complicated grid-connection procedures, rigid net-metering rules, equipment quality, maintenance, and foreign-exchange costs for imported panels and inverters.
There was also a sharp divide between the industrial and residential markets, he said. For factories, especially those with daytime-heavy operations, suitable roof space, and exposure to rising electricity tariffs, the economic incentive is compelling.
For households, however, adoption will lag unless payback periods shorten and financing becomes genuinely affordable.
“My view is that solar will not replace imported gas this year,” Metwally said. “But it could become an important demand-side buffer over the next two to three years if regulations, financing, and localised installation capacity are streamlined.”
According to Kamal, the shift to solar energy and renewables at large is critical for national energy security. He said that Egypt’s broader energy mix remains unsustainable as it relies on petroleum and natural gas for the bulk of transport, heating, and power needs.
While recent renewable plants have pushed clean energy over the 10 per cent threshold for electricity generation, fossil-fuel dependency still hovers at nearly 90 per cent.
“The over-reliance on a single fuel source poses significant operational risks. To ensure supply continuity, comprehensive green incentives must expand beyond heavy industry to all sectors, establishing decentralised solar as a vital structural buffer for the entire national grid,” he said.
* A version of this article appears in print in the 4 June, 2026 edition of Al-Ahram Weekly.
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