Egypt will reportedly be eligible to grab stakes ranging from 20% to 25% in green hydrogen projects being developed by foreign companies, three government sources told Enterprise Climate. The stakes have already been agreed upon in the inked MoUs between Egypt and the companies, and would be split evenly between three governmental bodies which include the Egyptian Electricity Transmission (EETC), the Sovereign Fund of Egypt (SFE) and the entity governing the project site like the Suez Canal Economic Zone (SCZone), the sources added.

The rationale: The sources reasoned Egypt’s prospective ownership in the upcoming projects is relative to the amount of infrastructure built to accommodate them, and the services and resources spent from Egyptian coffers to aid in the projects’ implementation. For example, Egypt has spent bns to modernize and expand the infrastructure for its electricity sector to assist companies in setting up the projects — including EGP 70 bn for infrastructure in the SCZone to create a global hub for the production of green fuel, the sources added.

Dial in the consultants: A nine-month consultancy study by Belgium’s Elia Grid International to put a price on the services being extended by Egypt is nearing completion, the sources said. The study will crucially include a proposed tariff and the cost of using electricity — generated from renewables — from the EETC grid in the prospective projects, they added. The study will also include the governance mechanisms for green hydrogen in the country through the transport and storage networks while taking into account the electricity tariff from the EETC and demand for electricity in light of future interconnector projects between Egypt, neighboring countries, and the EU.

Some details still need ironing out: Assurances electricity purchased from the state will be generated from renewable sources remains unclear, and remain critical with EU exports in sight. Ensuring that the electricity is renewable-sourced is still being determined, Hydrogen Egypt CEO Khaled Naguib told Enterprise Climate. “Developers are going to be looking for commitments from the government on what type of electricity will be used from the grid,” he said, “this is still an open discussion, because the grid and electricity will need to be certified [to be labeled green].” Other questions lingering include whether the existing grid will be used for the prospective green hydrogen projects or whether there will be a “dedicated grid” for the facilities, Naguib added.

Where the EU stands now on the green label: Recurring changes by the EU in regards to green hydrogen rules and the industry — subject to supply and demand — is also fuelling the ambiguity, Naguib said. The European Commission — the EU’s executive arm — adopted final rules in June (pdf) that define what constitutes renewable hydrogen within the bloc. The strict rules aim to ensure that the green hydrogen produced is “dominantly” generated using energy from renewable projects rather than fossil-fueled power plants, adding that “evidence should be provided” regarding the source of the electricity supply used.

And that’s not all: A senior government official told Enterprise Climate that Egypt’s highly anticipated green hydrogen law is currently being reviewed ahead of submitting it to the House of Representatives in the next parliamentary session next October. It will include the cost and legislative frameworks needed to produce the green fuel, as well as outline a clear role for the involved parties and incentives for the projects, he added. The draft bill could be ready by November to activate the signed agreements and MoUs, he added.

REMEMBER- Egypt is experiencing a green hydrogen bonanza: The Egyptian government signed several framework agreementsduring COP27 with foreign companies to construct several green hydrogen and ammonia facilities in the SCZone. The facilities would cost a combined USD 83 bn and collectively produce up to 7.6 mn tons of green ammonia and 2.7 mn tons of hydrogen a year. Egypt also approved incentives in May to boost the country’s green hydrogen sector and lure in much-needed foreign exchange inflows.

And some fresh ones: Abu Dhabi-headquartered green fuels developer Ocior Energy has signed preliminary agreements earlier this month with the Egyptian government to build a USD 4 bn green hydrogen production plant in the SCZone. The Indian company is expected to finalize the project agreement in coming months, according to officials. Swiss renewable power group Smartenergy are also in talksto set up a USD 1 bn green hydrogen project in Egypt with agreements set to be signed in 4Q 2023, a government official told Enterprise Climate last month.

Tags: