Egypt’s electricity sector is undergoing a transformation to address growing challenges and improve its infrastructure. The government has invested heavily in the sector over the past 11 years, but recent hurdles — such as declining natural gas production from the Mediterranean’s Zohr field and rising demand — have forced a shift in priorities. The focus now is on ramping up renewables, modernizing grid systems, and ensuring consistent power throughout the summer — all of which require significant additional investments.

Why now? Declining natural gas production and a return to gas imports have raised new challenges for Egypt's energy mix, a senior government official told EnterpriseAM. Coupled with the global impact of the Russia-Ukraine war, soaring shipping costs, and currency exchange rate fluctuations, the electricity sector has had to adapt rapidly. These issues have increased Egypt’s import costs by over EGP 100 bn, highlighting the urgency of diversifying energy sources and modernizing infrastructure.

Renewables to the rescue: In light of this, the government is upping the ante with regard to its renewable energy targets, with plans to add 4 GW of solar and wind capacity to the grid by this summer. This push includes significant investments in new battery storage systems and grid upgrades to cut fuel consumption and energy losses, with these efforts having saved us some EGP 1.2 bn on a monthly basis over the last several months of 2024.

Grid upgrades and regulatory reforms are high on the sector’s list of priorities: Regional grid networks still require up to EGP 1.5 tn in investments by 2030 to modernize infrastructure and strengthen regional interconnectivity, our source told us. The sector also hopes to transition to an open electricity market in which multiple parties can sell electricity, in line with plans to position Egypt as a regional energy hub.

The government’s plans for the grid are already in motion: The Electricity Ministry aims to invest EGP 63 bnin grid upgrades by the end of FY 2024-25 to improve efficiency and accommodate growing demand. The government is also focused on connecting more and more renewable energy projects to the grid, particularly through the elimination of integration fees. In addition, the Electricity Ministry is working to develop the electricity transmission system, with 780 new transformer stations built so far.

Big wind and solar projects are expected to come online this year: Several major projects are poised to change the energy game in 2025. AMEA’s Amunet wind project should see 500 MW of a larger 1.5 GW project come online this summer, while the company’s Benban solar plant is expected to begin producing 300 MW of power this August as part of a larger 1 GW project. Meanwhile, a local-international consortium of Orascom Construction, Engie, Toyota Tsusho, and Eurus Energy added 306 MW of a 650 MW wind farm project in Ras Ghareb to the national grid earlier this month, with the rest slated to come online by 3Q 2025.

Hydrogen blending and nuclear energy are also in the mix: A pilot program in Sharm El Sheikh is testing blending hydrogen into the natural gas system, with hopes that the stopgap measure will lessen natural gas requirements. Meanwhile, progress at the Dabaa nuclear plant is on track, with the first reactor’s core set to be received by July 2025 and installed by October 2025. Once operational, the Electricity Ministry expects nuclear energy to contribute 5% of Egypt’s total energy mix.

**We ran a two-part series on Egypt’s prospects for green hydrogen blending — alongside possible challenges — in a Going Green last year.

Digital transformation is powering the sector: The government’s focus on digitization in the electricity sector is already showing results. By 2025, 19.2 mn electricity customers will be connected to advanced monitoring systems, managed from a new digital consumption monitoring center in the New Administrative Capital. Smart and prepaid meters and integrated digital tools are also key to the government’s plan to streamline consumption management and reduce inefficiencies.

Regional connectivity plans are taking shape: Egypt is making headway in its electricity connectivity projects, with initial phases of the Egypt-Saudi grid link set to launch this year. Upgrades to the Egypt-Libya grid and stronger ties with Jordan are also in progress, bolstering Egypt’s position as a regional electricity hub.

Challenges ahead: Despite these promising developments, challenges persist. Currency instability and rising inter-sector debts require careful management, while the sheer scale of infrastructure modernization — including integrating older systems with new ones — presents added challenges.

Your top infrastructure stories for the week:

  • Eni’s planned fixed regasification unit in Damietta will cost USD 190 mn, up from a previous price tag of USD 150 mn that a government official told EnterpriseAM when we first heard of the plan back in August.
  • A blackout-free summer in 2025? Egypt has secured enough energy supplies to ensure that the nation’s power plants can run at full capacity when the summer season approaches and demand jumps, Electricity Minister Mahmoud Esmat said.
  • The national grid just got a little greener, with 306 MW of a 650 MW wind farm in Ras Ghareb being developed by a local-international consortium of Orascom Construction, Engie, Toyota Tsusho, and Eurus Energy now online. The entire project is expected to be up and running and connected to the national grid by 3Q 2025.
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