Energy: Scaling up the deployment of renewables in Egypt

Egypt has the potential to become a renewable energy superpower given the country's production capacity and its proximity to the European and Asian markets. The European Bank for Reconstruction and Development (EBRD) has been a key partner of Egypt as the country is deploying renewable energy at scale.  

The Bank’s support for renewables in Egypt has been steadfast, investing in the largest solar plant in Africa and supporting regulators with the design and implementation of competitive auctions for renewable energy. The combination of investments, technical assistance and policy dialogue to support the Egyptian energy sector culminated in the launch of the Energy Pillar of the Nexus-Water-Food-Energy programme, with the EBRD as the lead development partner. \

Benban solar park 

Since 2012, the Bank has been part of the flagship Benban solar park development, investing more than US$ 1.1 billion in 16 photovoltaic solar plants with a capacity of 750 MW, which is more than half of the park’s 1,465 MW contracted capacity.  

Benban has added the equivalent of 2.65 per cent of total installed capacity, increasing renewable capacity by 165 per cent from 2017 levels.  

All the park’s solar plants were connected to the national electricity grid in 2019, generating clean, reliable energy for North Africa’s largest economy. They were produced by leading local and international solar energy developers, bringing more of the private sector into the Egyptian electricity market, which has traditionally been dominated by the public sector. 

Reforming the regulatory environment 

Following Benban, Egypt began to move away from the feed-in-tariff (FiT) framework and concentrate its efforts on developing competitive solar auctions in order to attract investors and promote trust in the regulatory framework. A feed-in-tariff guarantees renewable energy producers a fixed price for the electricity they generate, providing investment certainty but potentially leading to higher costs for consumers. In contrast, renewable energy auctions introduce competition by requiring developers to bid for contracts, ensuring that only the most cost-effective projects are selected. This competitive process typically drives prices down, leading to more efficient allocation of public funds and lower electricity costs. 

With support from the Green Climate Fund, the EBRD helped Egyptian regulators with the design and implementation of renewable energy auctions. The tendering of new projects started with the 200 MW Kom Ombo solar project, which achieved a record low tariff of US$ 0.0247/kWh. 

The EBRD is also supporting broader energy sector reforms in Egypt. These reforms were initiated with Law 87/2015, which established the legal framework for the transition from a traditional, vertically integrated, regulated state monopoly model to a fully competitive market. The law envisages the gradual liberalisation of the electricity sector, with extensive private-sector participation.  

The Bank has been working with the Egyptian Electric Utility and Consumer Protection Agency (EgyptERA) to review the regulatory framework and define the key parameters to allow private generators to connect to the grid and give consumers freedom to choose their electricity suppliers. This work involved setting regulatory rules for private-to-private electricity contracts and defining the roles and responsibilities of different stakeholders as well as the operational financial arrangements between them. In 2024, EgyptERA approved these new regulations and work is currently underway on a pilot programme to implement private-to-private electricity contracts. 

To further unlock the country’s renewable energy potential and help it become a regional energy hub, the Bank has supported the government in conducting a feasibility study to assess the viability of a low-carbon hydrogen market in Egypt and in drafting the National Hydrogen Strategy, which was released in 2024. The strategy aims to better understand the role of green hydrogen in decarbonisation, capitalising on the low cost of renewables and the growing demand in both local and export markets. The strategy will pave the way for Egypt to become one of the global leaders in the low-carbon hydrogen economy, acquiring an 8 per cent market share of globally traded hydrogen. 

Powering ahead with EBRD support 

Building on the Bank’s record, Egypt chose the EBRD as the lead development partner on a new country sector platform: the energy pillar of Nexus-Water-Food-Energy programme.  

This platform was launched at COP27 and aims to develop 10 GW of new private renewable energy capacity by 2028 and retire 5 GW of inefficient fossil-fuel capacity by 2028. It combines pledges of US$ 1.5 billion of public, donor, and international financial institution (IFI) finance, which is expected to mobilize US$ 10 billion of private investments across the Egyptian energy sector. Importantly, it addresses two of the most common issues that prevent countries from transitioning away from fossil fuels: strengthening the energy grid to absorb new capacity and supporting a just transition plan for affected workers. In this way, the energy pillar of NWFE can be a model to replicate in other countries and sectors.