Egypt's green energy ambitions point to promising future

As both advanced and developing nations around the world are looking for ways to ensure their energy supply while cutting their carbon, threats to energy imports from risks in the Red Sea have only fuelled ambitions.

Attacks on ships by Yemen's Houthi rebels have harmed Egypt's economy, which was already struggling under massive levels of debt.

Last year, the country earned more than $8.7bn from the transit fees of ships passing through the Suez Canal, but traffic has been down more than 40% in recent weeks as the big shipping operators divert their cargo around Africa instead.

Forging a greener future

Given the high set-up costs, Egypt is expected to forge partnerships with other nations in North Africa, the Middle East, and the Arabian Gulf to produce its green hydrogen.

Just last week, oil giant BP became the latest company to say it was throwing money at green hydrogen, evidencing how the industry seems to think this is one for the future.

With energy prices having skyrocketed after the crisis triggered by Russia's invasion of Ukraine (and the sanctions that followed), states are keen to get in on the act.  

Egypt aims to produce up to 1.5 million tons of green hydrogen annually by 2030, leveraging 19 gigawatts of energy generated from solar and wind.

Beyond that, it plans to produce around 5.8 million tons by 2040. This is equivalent to 5% of the global green hydrogen production market today. Of this, 3.8 million tons would be made available for export, while carbon emissions would be cut by up to 40 million tons annually by 2040.

The Suez Canal Economic Zone is already producing green hydrogen, according to the 2023 World Investment Report issued by the UN Conference on Trade and Development. The Green Hydrogen Station was awarded for best energy project in developing countries.

Overall project costs total $8bn, reflecting the importance Egypt attaches to it. The country expects foreign investments in green hydrogen energy to top $81.6 bn by 2035.

Egypt has agreed to work with several Arab companies on green hydrogen, with consultancy services from the European Bank for Reconstruction and Development.

A joint development agreement has also been reached to set up a green hydrogen production plant with a capacity of 100 megawatts and its operation in the Ain Sokhna Industrial Zone, affiliated with the Suez Canal Economic Zone.

The Sovereign Fund of Egypt, Norwegian renewable energy company SCATEC, Egyptian construction company Orascom Construction, and Emirati chemicals firm Fertiglobe have agreed on terms for a purchase contract.

A deal is also to set up a project producing green ammonia, an environmentally friendly shipping fuel, with global logistics giant Maersk.

Accelerating investments

Cairo is accelerating investments to harness the surplus energy generated from alternative or renewable sources to produce green hydrogen, using spare capacity as energy storage infrastructure develops.

The green economy is predicted to be worth around $8tn by 2030, and Egypt wants the Suez Canal Economic Zone to be a big part of it.

The zone would work with two other areas in the strategic locations of Al Sokhna and East Port Said — chosen for their proximity to the European Union and the Middle East.

According to some, Europe's demand for green hydrogen is projected to increase from around 3% of its total energy consumption today to around 20% within a generation.

Egypt is wasting no time. It has set up a National Hydrogen Council to boost the industry and stimulate local demand by integrating green hydrogen into the Egyptian energy mix. Domestic demand will hedge against global energy market fluctuations.

On his part, Dr Mohamed Salah El Sobky, professor of energy planning and former head of the New and Renewable Energy Authority, told Al Majalla that progress was being made.

"Egypt has entered into a significant number of memoranda of understanding, protocols, and framework agreements for hydrogen production from renewable energy, exceeding 38.5 gigawatts," he said.

He explained that the projects stipulated in these agreements should let Egypt produce green hydrogen at a competitive price compared to other energy sources.

"Egypt is distinguished by its ability to generate electricity from renewable energy at low-cost rates, approximately 2 cents per kilowatt-hour for large-scale solar projects and 2.4 cents per kilowatt-hour for wind."

The country does not yet produce enough for export but is working with others in the region to scale up. He said Egypt's advantage lies in competitive pricing and the conclusion of long-term agreements for hydrogen procurement.

Leading the way

El Sobky added that EU countries were now doing the maths, assessing whether it was better to produce their own green hydrogen or buy it in from countries like Egypt.

"The technology utilised for hydrogen production in Egypt is the same as anywhere else, and the costs are comparable," he said.

"Egypt holds the advantage of generating large quantities of electricity from new and renewable energy sources (wind and solar).

"As the EU produces about 50% of its green hydrogen requirements, importing Egyptian electricity from renewable sources would be more cost-effective."

He added that Egypt had signed "many agreements" with countries worldwide for producing green hydrogen, saying it "goes beyond mere production and transportation".

Hydrogen can be "produced and utilised with added value by entering many industries as an energy source", he said.

"It will prove advantageous for the Egyptian economy and reduce the import bill."

Egypt topped the Arab region for producing electricity from solar and wind, at around 3.5 gigawatts. It wants to reach about 6.8 gigawatts this year. In Africa, Egypt had the second-highest solar energy production and the third-highest wind.

Alongside the desalination of water, it wants to increase its reliance on renewable energy, becoming a net exporter. Green hydrogen plays an important role.

If all goes to plan, Egypt will capture 8% of the global hydrogen market, helping to boost its gross domestic product (GDP) by $18bn by 2025.

Hydrogen is the most abundant element in the universe. Egypt is hoping that some of that abundance rubs off.