Egypt is leveraging its vast solar potentials to meet rising energy demands and reduce dependency on expensive natural gas imports. Despite regulatory challenges and market subsidies slowing progress, the government’s emergency energy package highlights a renewed focus on expanding solar power generation.
Unlocking Solar Potentials Amid Energy Challenges
Egypt is making strides in unlocking its solar potentials to address the growing demand for energy and reduce reliance on costly natural gas imports. With vast deserts, abundant sunlight, and a well-developed electricity grid, the country has the key resources to become a leader in solar power generation. However, regulatory barriers and subsidized energy markets have slowed the adoption of this renewable energy source.
The urgency to transition to solar power emerged after a sharp decline in domestic gas production caused energy shortages and blackouts last summer. This wake-up call prompted the government to announce an emergency energy package. Ahmed Mortada, head of energy for the European Bank for Reconstruction and Development (EBRD) in Egypt, described the move as essential for stabilizing the nation’s energy sector.
Egypt’s dependence on imported liquefied natural gas (LNG) has placed a heavy financial burden on the economy. The country spent over $1 billion more than expected on LNG imports last year. Analysts project that this expenditure will rise in the coming years.
Solar energy offers a cost-effective alternative. Hussain Al Nowais, chairman of UAE-based renewable energy producer AMEA Power, emphasized the potential savings. “Electricity from solar plants costs between 2¢ and 3¢ per kilowatt hour (kWh), significantly lower than gas turbines, which cost 7¢ to 9¢ per kWh,” he stated.
AMEA Power has already invested $500 million in a 500-megawatt (MW) solar array in Aswan and plans to build another 1,000 MW plant nearby. The new project — expected to begin production by early 2026 — will advance $300 million in funding before final financing is secured.
Expanding Solar Infrastructure
Egypt’s solar potential has attracted other international players. Norway-based Scatec signed an agreement for a 1,000 MW project in September 2024. Additionally, a consortium involving UAE firms Infinity and Masdar and Egypt’s Hassan Allam agreed to develop a 1,200 MW solar facility in November.
Despite these advancements, Egypt needs thousands of additional MWs to meet growing energy demands. Prime Minister Mostafa Madbouly announced plans to increase the share of renewables in the electricity mix to 42% by 2030, up from the current 11.5%.
The slow adoption of solar power in Egypt is partly due to regulatory hurdles. Industry insiders point to a lack of coordination among government departments. Yaseen AbdelGhaffar of SolarizEgypt highlighted the fragmented approach, stating, “The problem with Egypt is that it operates like a bunch of islands. There’s no centralized coordination among ministers.”
In 2024, the government enacted a private-to-private law allowing solar power producers to supply electricity directly to businesses. However, the law limits projects to 500 MW nationwide, thereby slowing the rollout of large-scale solar initiatives.
Residential adoption also faces challenges, as current regulations prevent apartment dwellers from installing two-way electricity meters unless they own their entire building. These meters would enable consumers to supply excess energy back to the grid. However, despite industry proposals to amend this rule, the government has not prioritized the change.
Economic Incentives for Solar Growth
The economic viability of solar energy depends on the gradual removal of energy subsidies. Egypt’s $8 billion financial support agreement with the International Monetary Fund (IMF) includes a commitment to reduce these subsidies. However, the government has delayed electricity price hikes due to the ongoing economic crisis.
When subsidies are fully removed, the cost of electricity from the state grid will likely rise above E£3 to E£4 per kWh. Ayman Rasekh, CEO of SolarSol, believes this will drive widespread adoption of rooftop solar panels. “Once subsidies are gone, solar panels will become as common as satellite dishes,” he predicted.
Egypt is beginning to capitalize on its vast solar potentials to address energy shortages and reduce reliance on costly natural gas imports. International investments, regulatory reforms, and a focus on grid improvements are driving this transition.
While challenges remain, the shift toward renewable energy offers significant economic and environmental benefits. By unlocking its solar potential, Egypt positions itself as a leader in sustainable energy in the Middle East and North Africa.
