The green gold rush: Why renewable energy is Egypt’s next big opportunity
Economist David Ricardo once argued that trading comparatively competitive goods across countries optimizes economic efficiency and maximizes profits. In the twenty-first century, the trade of renewable energy has redefined comparative advantage, offering resource-rich nations such as Egypt a unique opportunity.
Historically, Egypt’s exports have been dominated by petroleum products, cotton, textiles, and chemicals. However, as the global energy landscape evolves, Egypt stands on the brink of transformation. The country is on the cusp of harnessing its renewable energy potential to meet domestic demand, reduce its reliance on fossil fuels, and emerge as a leader in clean energy exports.
For Egypt to achieve this, however, it must first address critical internal challenges, such as its dependence on natural gas for electricity generation and its underdeveloped renewable energy infrastructure. Achieving energy self-sufficiency is a necessary precursor to realizing the country’s green energy export ambitions.
Tapping into endless sunshine
Egypt is endowed with abundant sunshine. It boasts some of the highest solar irradiance levels in the world, ranging from 2,000 to 3,200 kilowatt hours (kWh) per square meter annually. With more than 3,500 hours of sunshine per year and ample open space, regions such as the Western Desert and Upper Egypt hold vast, untapped potential for solar energy development.
Several projects already in the works highlight this potential. The Benban Solar Park, one of the world’s largest solar installations, currently has a capacity of 1.8 gigawatts (GW), with plans for significant expansion. Upcoming developments include AMEA Power’s additional 2 GW project with 900 megawatt hours (mWh) of battery storage, and the Masdar/Hassan Allam Utilities/Infinity consortium’s planned 300 MW expansion at Benban alongside a 900 MW project at Dakhla Oasis (1.2 GW in total). Elsewhere, Abydos Kom Ombo Solar PV Park will host a 500 MW facility, and the Masdar consortium signed another significant deal with over 6 GW of new solar capacity, 4 GW of new solar manufacturing capacity, and 2 GW of new battery manufacturing capacity.
Harnessing wind power in the Gulf of Suez
Wind energy is another cornerstone of Egypt’s renewable energy strategy. The Gulf of Suez and the Nile Valley offer high wind speeds, averaging 8–10 meters per second. Vision 2030, a strategy launched by the Egyptian government nine years ago, targets 14 GW of wind capacity by the close of this decade, with several large-scale projects already underway.
Notable developments include AMEA’s 5 GW wind farm in the Gulf of Suez, expected to be operational by early 2026, Hassan Allam/ACWA Power’s 1.1 GW wind farm, and Orascom Construction Consortium’s 650 MW project at Ras Ghareb. Additionally, the Masdar consortium, in partnership with Infinity Power and Hassan Allam Utilities, is developing a 10 GW onshore wind farm, which will rank among the largest globally. The project is projected to reduce carbon emissions by 23.8 million tons annually, accounting for approximately 9 percent of Egypt’s total current emissions. Other smaller but significant initiatives include Alcazar’s 2 GW wind farm and Taqa Arabia/Voltalia’s combined wind and solar facilities (1 GW and 2.1 GW, respectively).
The promise—and dilemma—of green hydrogen
Egypt is positioning itself as a leader in green hydrogen production, which is based on renewable resources including solar and wind. According to the International Energy Agency, Egypt could produce green hydrogen for under two dollars per kilogram by 2030. The Suez Canal Economic Zone has been identified as a hub for green hydrogen development, with Siemens and Scatec working on a facility capable of producing one million tons annually by 2035.
However, green hydrogen presents a dilemma. Diverting renewable energy to hydrogen production reduces the energy available for the domestic grid, where natural gas remains dominant. To make green hydrogen a viable export commodity, Egypt must first stabilize its domestic energy supply and reduce its reliance on fossil fuels for electricity generation.
The potential roadblocks ahead
Egypt has significant renewable energy potential, but its true impact lies in effective implementation. The country’s ability to harness this potential will be key to achieving its sustainability goals and driving long-term energy transformation. Currently, Egypt’s energy ambitions face a range of structural and economic challenges that hinder its progress toward becoming a clean energy leader.
One major obstacle lies in the country’s electrical grid, which is currently incapable of integrating large-scale renewable energy projects. Despite ongoing investments, present renewable capacity has stagnated at under 12 percent of Egypt’s total 60 GW capacity, emphasizing the urgent need for grid upgrades and energy storage systems to support future expansion.
Additionally, regulatory barriers continue to stifle progress. The fragmented oversight of the energy sector, coupled with protracted permitting processes and systemic inefficiencies, discourages investments and delays project timelines.
Financial constraints further compound these issues. With high public debt and limited fiscal space, funding renewable energy projects is difficult. While frameworks established in 2017 by the Green Climate Fund and the European Bank for Reconstruction and Development aim to attract private capital, financial roadblocks persist.
Most pressing, however, is that Egypt’s energy mix is still overwhelmingly dependent on fossil fuels, with approximately 80 percent of electricity generated from natural gas and oil. This reliance exposes the country to the risks of price volatility and supply disruptions, and it also undermines efforts to transition toward sustainable energy. Furthermore, dependence on gas for the domestic grid undermines Egypt’s ability to maximize liquefied natural gas (LNG) export earnings while tackling domestic challenges, such as summer blackouts and increasing gas imports due to declining production at the offshore Zohr field.
Finally, fuel subsidies from the Egyptian government—estimated at seven billion dollars annually—distort energy markets and make renewables less competitive compared to fossil fuels.
Addressing these interconnected challenges is critical for Egypt to unlock its significant renewable energy potential and solidify its position as a global clean energy leader.
A balanced path to global leadership
Egypt stands on the verge of a renewable energy revolution, uniquely positioned to lead in clean energy generation and, eventually, exports. Its abundant solar irradiance, strong wind corridors, and significant potential for cost-effective green hydrogen production give the country a competitive edge in the global renewable energy landscape.
This potential is reflected in Egypt’s Vision 2030, which targets 42 percent of electricity generation from renewables by 2030. The Egyptian government has said that it wants renewable energy to account for 60 percent of the energy mix, including 40 billion dollars’ worth of green hydrogen investments. Through its Nexus of Water, Food, and Energy program, the government also aims to add 10 GW of renewable capacity by the end of this year with an investment of ten billion dollars.
These goals are ambitious, to say the least. To achieve its aims, Egypt must first secure energy self-sufficiency via rapid growth in renewable energy generation. Directing most or all renewable production to the domestic grid to replace natural gas gradually is an important first step. Maximizing LNG exports while transitioning renewables into the energy mix could generate the foreign exchange earnings needed to fund infrastructure development for renewables and other projects.
With smart, forward-looking policies and strategic investments from the Egyptian government, combined with robust international partnerships, Egypt can become a global clean energy hub. By harnessing its vast renewable resources, it can not only light up its own future but also contribute to powering the world—both literally and figuratively.
Jonathan Cohen is the former US ambassador to Egypt and the United Nations.
Racha Helwa is the director of the empowerME Initiative at the Atlantic Council’s Rafik Hariri Center for the Middle East.
Further reading
Thu, Jan 23, 2025
In the Horn of Africa, Turkey and Egypt unfold a strategic alignment—or potential rivalry
Report By
The recent reconciliation between Turkey and Egypt illustrates the potential for cooperation in the Horn of Africa.
Thu, Jan 23, 2025
From rivalry to cooperation: The geopolitical implications of Egypt-Turkey rapprochement
Report By
Turkey and Egypt’s recent rapprochement comes after years of tension.
Fri, Nov 22, 2024
An energy and sustainability road map for the Middle East
Report By Ariel Ezrahi
The MENA region is facing a severe crisis due to climate change. Here's how the US can shape a new model of climate diplomacy.
Image: A worker cleans solar cells on a rooftop of a hotel in the resort town of Sharm el-Sheikh, the first to operate a solar-powered plant in a bid to turn to clean energy as the city prepares to host the upcoming COP27 summit in November, in Sharm el-Sheikh, Egypt, June 4, 2022. Picture taken June 4, 2022. REUTERS/Mohamed Abd El Ghany