Egypt has secured a $1.8 billion renewable energy agreement with Norway’s Scatec and China’s Sungrow, coupled with fresh LNG cooperation with Qatar, which indicates a pragmatic recalibration rather than a retreat from ambition.
What is unfolding is not a pivot away from gas, nor an abrupt leap into renewables, but a layered energy strategy shaped by economics, demographics, geopolitics, and climate realities.
READ ALSO: Egypt Launches Hurghada Airport PPP Driving Aviation, Economy, And Investment
Egypt’s clean energy efforts gained significant momentum with the signing of two major projects exceeding $1.8 billion, witnessed by Prime Minister Mostafa Madbouly. The cornerstone is the Energy Valley initiative in Minya, led by Scatec, which will integrate large-scale 1.7 GW solar power generation with a 4 GWh battery storage network spread across multiple governorates, supported by dedicated transmission infrastructure to supply industrial zones.
This configuration allows 24/7 clean power, a critical leap beyond intermittent renewables that historically strained Egypt’s grid stability.
Complementing Egypt’s clean energy push, Sungrow will establish the first large-scale Battery Energy Storage System (BESS) manufacturing plant in the Middle East and Africa, a 50,000 sqm facility in the Suez Canal Economic Zone with a 10 GWh annual capacity set to begin production in April 2027. This move is strategically significant as it localises the supply chain, reduces import reliance and project costs, and positions Egypt as a central hub for energy storage to support the region’s growing renewable capacity.
These projects are critical components of Egypt’s mandatory strategy to transform its energy mix, aiming to supply 42% of its electricity from renewables by 2030 and 60-65% by 2040, as the country’s annual electricity demand grows by 6-7% due to its large and urbanizing population and industrial expansion, a burden that can no longer be met economically or sustainably by gas alone.
Egypt’s energy landscape has undergone a dramatic reversal, shifting from a regional LNG exporter to a net importer. This change, driven by a nearly 30% decline in domestic gas production over three years, has imposed a severe fiscal burden, with a projected petroleum and LNG import bill of around $20 billion for 2025, straining foreign currency reserves. The situation underscores the vulnerability of relying on mature fields and exposes Egypt to the volatility of the global LNG market.
In navigating this crisis, Egypt’s relationships with key gas suppliers are crucial. Its complex, interdependent history with Qatar, the world’s dominant LNG exporter, has evolved from diplomatic rift to renewed cooperation, including a recent deal for critical summer cargoes. Simultaneously, pipeline gas from Israel’s Leviathan field serves as a vital, lower-cost buffer against spot LNG prices and supports longer-term re-export ambitions. However, Egypt’s high population pressure and consumption profile make replicating Qatar’s LNG-centric model impossible, necessitating a hybrid strategy.
This imperative for diversification is why large-scale renewable and storage projects are now a macroeconomic necessity. The strategic push for solar generation and local battery manufacturing directly supports national targets of 42% renewable electricity by 2030, a goal mandated by annual electricity demand growth of 6-7%. These projects are designed not to immediately replace gas but to reduce exposure to LNG price shocks and secure energy for industrial growth, which is already driving a recovery in GDP.
In essence, Egypt’s path is a pragmatic, simultaneous pursuit of gas security and renewable expansion. The outlook aims for a return to LNG exports in the late 2020s while building a resilient energy system for the long term. The transition is strategic rather than ideological, hedging against volatility to protect economic sovereignty and sustain growth under immense demographic and fiscal pressure.
