Karm Holding is planning to build a solar microgrid to unlock South Sinai's stalled industrial zone

Karm Holding will invest an initial USD 8.5-10 mn to build and operate an independent solar microgrid serving South Sinai’s long-stalled Abu Zenima industrial zone, CEO and Co-founder Ahmed Zahran tells EnterpriseAM. The company expects to begin construction within around four months, subject to securing regulatory and construction approvals.

Why it matters: Electricity is the bottleneck that has kept the zone dormant. The 3.9k feddans industrial zone on the eastern shore of the Gulf of Suez sits close to deposits of manganese, silica sand, and a specialized mining port, but has stalled for years because factories lacked affordable, reliable power. “The main bottleneck is electricity — not water or logistics — that’s what will unlock everything else,” Zahran tells us.

SOUND SMART- Manganese is a critical mineral and an increasingly sought-after input for EV battery cathodes, while high-purity silica sand is the feedstock for solar panels and semiconductors. Both sit upstream of industries Egypt has said it wants to build — from a domestic EV supply chain to its solar-manufacturing push.

How it works: The South Sinai governorate awarded Karm an assignment order to provide the zone’s electricity infrastructure, including its internal distribution network and connections to factories, Zahran says. The company will finance, build, own, and operate the system without capital contributions from the governorate or tenants, who will pay only for their final connection to the network.

A two-stage system: The zone’s energy demand currently sits below the 30 MVA threshold Egyptian Electric Utility & Consumer Protection Regulatory Agency (EgyptERA) requires to be allowed to connect to the national grid. During Karm’s first stage, it will have to supply energy through an isolated solar-and-battery system, with diesel potentially needed as a backup. Once the zone’s demand crosses the threshold, Karm can connect the zone to the national grid for its second stage. At that point, Karm could generate solar power at another site, inject it into the grid, and wheel an equivalent amount to Abu Zenima. That would eliminate the need for diesel and cover the zone’s full consumption with solar.

The initial solar and battery-storage capacities are still being assessed, Zahran tells us. Two factories currently operating within the zone will provide the project’s initial demand, he adds. Rather than signing long-term PPAs to purchase output from a specific power plant, tenants will subscribe directly to Karm’s local network under utility-style distribution agreements, covering their connection, metering, and electricity consumption. Karm will act as both the power producer and the licensed distributor.

The immediate savings: Karm expects the system to cut the factories’ energy costs by about 30% from day one against what they currently spend running on diesel. Savings could rise to about 60% — and potentially higher — as demand climbs toward 30 MVA, according to Zahran.

The bigger hedge is off-grid

Remote and underserved areas are core markets rather than marginal ones. “The 8% of Egypt where everything is located — around the Nile and the Delta — is extremely saturated,” Zahran says. New industrial, agricultural, and tourism developments are consequently moving toward areas that are not yet fully served by the national grid. “Our mandate is connecting areas to the grid,” he adds.

A possible template for other industrial zones: Abu Zenima shows how decentralized solar can open new industrial areas before conventional grid infrastructure arrives. “We are hoping that Abu Zenima will be a model for the inclusion of renewable energy — specifically solar energy — in industrial zones,” Zahran says.

The assignment order is the first — and most difficult — regulatory step, Zahran tells us. Karm must now submit its proposed electricity pricing for review by EgyptERA’s higher committee, obtain an electricity-distribution license, and secure construction permits from the governorate.

In the meantime, Karm is pushing the Sinai partnership further: KarmBuild, a specialized construction and infrastructure subsidiary of Karm Holding, will join an existing team working with the governorate on plans to restore the historic Al Jubeil village in El Tor, focusing on implementation planning, sustainable construction, and conservation. Karm is also weighing several charging hubs along the Cairo-Sharm El Sheikh route, though locations haven’t been selected yet. “Today, no one will drive to South Sinai as long as there is no coverage,” Zahran says. The hubs would bridge that by giving EVs places to stop and recharge — creating demand rather than responding to existing traffic.