Egypt is turning to its vast solar potential to meet rising energy demands and curb its dependence on expensive natural gas imports. While regulatory challenges and market subsidies have slowed progress, the government’s recent emergency energy package signals a renewed push to expand solar power generation.
Unlocking Solar Potential Amid Energy Challenges
Faced with growing energy demands and a reliance on costly natural gas imports, Egypt is making significant strides to unlock its solar potential. The country is well-equipped to become a leader in solar power, boasting vast deserts, abundant sunlight, and a developed electricity grid. However, regulatory barriers and subsidized energy markets have so far hindered the widespread adoption of this renewable resource.
The urgency of transitioning to solar power was highlighted last summer after a sharp decline in domestic gas production caused widespread energy shortages and blackouts. This wake-up call prompted the government to announce an emergency energy package, a move Ahmed Mortada, head of energy for the European Bank for Reconstruction and Development (EBRD) in Egypt, described as essential for stabilizing the nation’s energy sector.
The country’s dependence on imported liquefied natural gas (LNG) has placed a heavy financial burden on its economy, with spending on LNG imports exceeding expectations by over $1 billion last year. Analysts project this expenditure will only continue to rise in the coming years.
Solar energy offers a cost-effective alternative with significant potential for savings, a point emphasized by Hussain Al Nowais, chairman of UAE-based renewable energy producer AMEA Power. “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 noted.
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 launch with $300 million in advance funding before final financing is secured.
Expanding Solar Infrastructure
Egypt’s solar potential is also drawing in other international players. Norway-based Scatec signed an agreement for a 1,000 MW project in September 2024, and in November, a consortium including UAE firms Infinity and Masdar and Egypt’s Hassan Allam agreed to develop a 1,200 MW solar facility.
Despite these advancements, Egypt still needs thousands of additional megawatts to meet its growing energy demands. Prime Minister Mostafa Madbouly has announced plans to raise the share of renewables in the electricity mix from the current 11.5% to 42% by 2030.
The slow adoption of solar power in Egypt is partly due to regulatory hurdles, with industry insiders pointing to a lack of coordination among government departments. Yaseen AbdelGhaffar of SolarizEgypt highlighted this 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 producers to supply electricity directly to businesses, but its impact has been limited. The law caps projects at 500 MW nationwide, slowing the rollout of large-scale solar initiatives.
Residential adoption faces similar challenges. Current regulations prevent apartment dwellers from installing two-way electricity meters—which would enable them to supply excess energy back to the grid—unless they own their entire building. Despite industry proposals to amend this rule, the government has not yet prioritized the change.
Economic Incentives for Solar Growth
The economic viability of solar energy is closely tied to the gradual removal of energy subsidies. As part of its $8 billion financial support agreement with the International Monetary Fund (IMF), Egypt has committed to reducing these subsidies, but the government has so far delayed electricity price hikes due to the ongoing economic crisis.
Once 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 price shift will drive widespread adoption of rooftop solar panels. “Once subsidies are gone, solar panels will become as common as satellite dishes,” he predicted.
By capitalizing on its vast solar potential, Egypt is taking crucial steps to address energy shortages and lessen its reliance on costly gas imports. International investments, regulatory reforms, and a focus on grid improvements are all driving this transition.
While challenges remain, the shift toward renewable energy offers significant economic and environmental benefits. Tapping into its solar resources will help position Egypt as a leader in sustainable energy across the Middle East and North Africa.
