Egypt’s power links are starting to trade both ways

Egypt’s two-way power link with Saudi Arabia could save the two countries around USD 600 mn a year — and possibly double that once fuel costs and global energy prices are factored in, a government source tells EnterpriseAM. Lower fuel use is central to those savings, the source says. Every imported megawatt that costs less than the next Egyptian plant in line saves the fuel that plant would have burned.

Why it matters: Egypt’s cables to its neighbors have mostly carried exports. The Saudi link gives Egypt a large source of power it can buy whenever that costs less than burning gas at home.

SOUND SMART- Merit order is the queue grid operators use to dispatch power — the cheapest generation goes first, and pricier plants come online as demand climbs. Imported electricity joins the same queue.

Prices set the direction

The trade runs on a clock: Saudi demand peaks in daylight as cooling loads track the sun, while Egypt’s peaks after dark. The USD 1.8 bn interconnector runs c. 1.3k km of overhead line and subsea cable from Egypt’s Badr converter station to Tabuk and East Madinah, carrying up to 3 GW in either direction. Technical testing at Badr is done, and commercial operation is expected before year-end, two government sources tell us, with one expecting the link to run efficiently from 1Q 2027.

Modeling suggests the flows follow prices more than peaks: A 2024 study of 2030 trade by Riyadh-based KAPSARC (pdf) has Saudi Arabia sending Egypt 6.0 TWh a year by 2030, mostly during daylight, when Saudi solar undercuts Egyptian prices. Egypt sends back 2.8 TWh, mostly on summer nights, when Saudi Arabia has to run gas steam turbines costing USD 77.5/MWh against USD 56.5/MWh for Egypt’s combined-cycle plants. The study assumes Saudi Arabia reaches 90 GW of solar by 2030 and that both countries pay international prices for gas.

How the contracts are written decides how much of that value survives: Fully hourly trading would make the link worth up to USD 210 mn a year in fuel and running costs, the study finds. A contract fixing volumes through the day would capture just USD 26-33 mn of that, while one that follows a daily pattern keeps USD 112-122 mn.

Elsewhere, exports still lead

Libya is the older model, scaled up. Egypt exports c. 150 MW there now. Talks resumed in January on expanding to 2 GW at a proposed EGP 10 bn, an Egyptian Electricity Transmission Company source says — EGP 2 bn for the Marsa Matrouh substation, now out to global tender, and EGP 8 bn for a new line. Egypt has c. 60 GW of installed capacity against a 40.2 GW peak this August, though how much of that gap is exportable depends on domestic demand and plant availability.

Greece is the long play, with generation built specifically for export. GREGY would run 3 GW across c. 950 km of subsea cable from Sidi Barrani to Attica, fed by c. 9.5 GW of wind and solar that developer Copelouzos Group plans to build in Egypt for the project. The EUR 3.5 bn project is on the EU’s priority infrastructure list and gained a EUR 9.56 mn Commission grant in January for seabed studies. It is still in the study and financing phases, with commercial operation targeted for 2030.

The grid sets the limit

Every piece of the hub puzzle in this issue meets on the grid. The gas Egypt displaces as renewables scale, the port and storage capacity being built for resilience, the private capital moving in alongside the state, and the cables reaching toward Saudi Arabia, Libya, and Greece all depend on a network that can move power to where it’s worth the most, when it’s worth the most. The first test comes before year-end, when the Saudi link starts trading. Its early months will put real numbers on what being a hub is worth.

Regional trade pays off in cheaper, reliable supply more than in export volumes. For Egypt, that leaves two practical tests: whether its domestic network can carry those flows and whether the trading arrangements make them worth it.