Energy companies operating off-grid currently enjoy a private market, but if the government expands the national grid to these areas, they may lose their edge. Here’s the situation: KarmSolar and Engazaat’s off-grid plants make money by selling electricity to customers that the national grid doesn’t reach yet. If the national grid expands to cover those places, the customer could buy electricity from the grid instead.

The Egyptian Electricity Transmission Company (EETC) has allocated nearly EGP 37 bn for investments for FY 2026/27 to upgrade and expand the national grid. The EETC is planning for 46% of the investments to go toward completing existing projects, while 54.04% will be allocated to new projects, replacement programs, and regional control centers. It’s not clear where the grid will be expanded to or on what timeline, but the news suggests that filling the country’s off-grid gaps is on the government’s to-do list.

We spoke to both companies, and neither seems particularly worried, for two reasons: both were always planning to connect to the national grid eventually, and both have diversification plans to hedge against any potential loss.

Ready to connect

We talked about off-grid projects back in February, when we dove into the “islanding” strategy — when a project runs independently of the grid as a hedge against load-shedding and a way to earn green credentials against carbon tariffs. Our original coverage never pinned down whether it was permanent or temporary. Both companies tell us now it was always temporary: islanding while they wait to connect.

“All the networks are designed so they can be connected to the national grid,” Engazaat co-founder and CEO Muhammad El Demerdash tells us.

KarmSolar takes the same approach: While most of the company’s projects are already connected to the grid, “the standalone projects are designed to be connected to the grid in the future, once the feeder lines get close,” KarmSolar CEO Ahmed Zahran tells us. He points to the Farafra Solar Grid as an example. The company more than doubled the Farafra Solar Grid’s contracted capacity to 8.37 MVA, up from 3.2 MVA, adding three agribusiness offtakers — potato exporter Daltex, Al Mazare’, and Al Hoda — funded through equity, per a 10 March 2025 statement (pdf). As of last November, the company was still describing that expansion as underway rather than complete.

Beyond Farafra, KarmSolar is positioning for a bigger infrastructure shift. It’s one of the first companies the Egyptian Electric Utility and Consumer Protection Regulatory Agency (EgyptERA) has qualified for the wheeling program the Electricity Ministry and the EETC began building toward in 2024, targeted to be implemented by 2027. “This system will allow the company to produce electricity in the New Valley and transmit it to consumers outside the region,” Zahran tells us.

SOUND SMART- Wheeling is the toll road for electricity: a company generates power in one place, then pays to send it across the national grid so it can sell it to someone else. In the future, when the national grid eventually reaches these off-grid locations, wheeling is how these companies will sell their product.

The diversification hedge

Joining the national grid was always the plan, but that doesn’t mean the companies aren’t currently lining up other streams of revenue. Leaning too hard on one buyer or one business model raises market risk and exchange-rate exposure, Zahran says. That’s why the company is moving into desalination and EV charging alongside its core electricity business.

And KarmSolar’s diversification is already showing up on the ground. The company is switching on an independent solar network in Dakhla, New Valley before year-end, Zahran tells us — news we first reported two weeks ago. The initial investment is roughly USD 19 mn, covering the solar plant, battery storage, and grid infrastructure needed to power 200k feddans of farmland.

Zahran has also floated a much bigger New Valley expansion with Governor Hanan Magdy — spanning Kharga, Dakhla, and Farafra — that could reach USD 700 mn at no cost to the governorate. He’s careful not to commit to a number. “There’s no set total yet for how much the expansion will cost,” he says, because the total depends on how large the area grows and how much power it ends up needing.

Like KarmSolar, Engazaat spreads its own risk across several sectors, including solar, water, and agrivoltaics, all financed under what the company describes as a “Buy Now, Pay Later” model it’s used since 2020.

The bottom line: We know the national grid will be expanded, but we don’t know where exactly it will go or the timelines. Regardless, these energy companies have already planned ahead, with a strategy aimed at grid integration where possible and sector diversification as a hedge. We’ll be keeping an eye on where the grid goes next and how these strategies play out.

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