How renewable energy could help Egypt beat its blackouts

Egypt has launched a major renewable energy initiative, marking a significant step in its efforts to reduce reliance on fossil fuels and address ongoing power shortages. The country has commenced work on its first large-scale hybrid solar and battery energy storage facility, located in Nagaa Hammadi, an area well known for its abundant sunlight. This innovative project, dubbed Obelisk, will combine solar generation with battery storage in a move to strengthen energy reliability and sustainability.

The $590 million project is being led by Scatec, a Norwegian company specializing in promoting renewable energy in growing markets. Obelisk will supply 1.1 gigawatts (GW) of solar power combined with 200 megawatt-hours (MWh) of battery storage, ensuring a steady energy source even when sunlight is unavailable.

Egypt, a country historically dependent on natural gas for electricity—accounting for approximately 75% of its power production—has faced a worsening energy crisis in recent years. Domestic gas production has declined, and rising global prices have forced the nation to import fuel at high costs. The pressure on Egypt’s electricity grid has resulted in frequent blackouts, prompting calls for urgent solutions.

Scatec is no stranger to Egypt’s energy landscape, having previously implemented four renewable energy projects in the country. But Obelisk stands out for its scale and technological integration. As Terje Pilskog, CEO of Scatec, notes, energy security is not only about generation—it’s about independence from volatile fuel markets. “Renewables offer predictability,” Pilskog explains. “You’re not subject to fuel imports or price shocks.”

In response to its growing energy challenges, Egypt has committed to increasing the share of renewables in its energy mix. The government plans to raise the current 13% renewable contribution to 42% by 2030. While these targets are ambitious, they are seen as critical to reducing reliance on fossil fuels, especially as output from major fields like the Zohr gas field diminishes.

As part of this transition, Egypt issued a tender in mid-2024 to purchase nearly two million tons of fuel oil to meet peak summer demand, which strains the electricity grid as temperatures routinely exceed 40°C (104°F) in southern regions. Prime Minister Mostafa Madbouly has urged citizens to conserve energy to help mitigate further outages.

However, as Egypt examines new local gas resources, it is also progressively focusing on its geographical strengths. The southern area of the nation is located in what specialists refer to as the “Magic Solar Belt,” an area with some of the highest solar radiation levels worldwide. Based on the Global Solar Atlas, Egypt is ranked fourth internationally for photovoltaic (PV) potential. This optimal spot makes the Obelisk project particularly encouraging.

Karim Elgendy, the executive director of the think tank Carboun Institute, which concentrates on the Middle East and North Africa, emphasizes the both economic and strategic importance of Obelisk. “This goes beyond being merely an environmental effort,” he states. “It represents an investment motivated by economic considerations. Such projects have the potential to showcase the feasibility of solar-plus-storage solutions in emerging nations.”

Traditionally, solar energy’s primary weakness has been its intermittency—it only produces power during daylight hours. However, the falling costs of battery storage are changing that. Since 2010, the price of large-scale battery storage projects has dropped by 89%, driven in part by manufacturing scale-ups in countries like China. As a result, hybrid plants that combine solar power with storage have become significantly more feasible.

In fact, the Global Solar Council projects that by 2027, solar-plus-battery configurations will offer the lowest-cost electricity generation globally. However, despite this potential, Africa remains underrepresented in global battery storage deployment. Of the estimated 363 gigawatt hours (GWh) of global storage capacity in 2024, Africa accounts for just 1.6 GWh.

This imbalance points to a larger issue—funding. Although renewable energy technologies are becoming more cost-competitive, financing large-scale projects in emerging markets is still a major hurdle. The “risk premium” often attached to investments in developing nations makes projects more expensive and difficult to launch. In 2024, Africa received only 3% of global energy investment, despite its enormous renewable potential.

To overcome these barriers, the Obelisk project is supported by several international financial institutions. The European Bank for Reconstruction and Development, the African Development Bank, and British International Investment have together pledged nearly $480 million to fund the initiative. This backing is essential to moving the project forward and signals growing international confidence in Africa’s renewable future.

Construction of Obelisk is scheduled in phases, with 561 MW of solar power and the full battery storage capacity expected to be operational by mid-2026. The project will ramp up to its full 1.1 GW capacity by the end of that year. When completed, it will be among the largest hybrid renewable energy systems on the continent.

Egypt’s shift towards solar energy aligns with a wider movement in Africa, where renewable energy is becoming a vital force for economic growth. Despite the continent having 60% of the world’s prime land for solar power, only 3% of Africa’s energy originated from solar in 2023. However, progress is being made. By 2024, South Africa and Egypt represented 75% of new solar developments in Africa, and at least 18 nations are anticipated to undertake projects surpassing 100 MW in 2025.

Meanwhile, Egypt has been broadening its infrastructure reach in additional manners. Notable endeavors such as the 2,000-kilometer fast rail network—connecting 60 cities nationwide—and enhancements to the Suez Canal intend to update transportation and commerce. These changes illustrate a more extensive plan to establish Egypt as a central point for energy, logistics, and economic development in the region.

Nevertheless, energy remains a critical issue. The country’s dependency on fossil fuels has made it vulnerable to external shocks, and rising temperatures only exacerbate power demands. But projects like Obelisk offer a pathway toward energy resilience and independence.

Beyond its practical benefits, Obelisk represents a shift in how nations in the Global South are approaching energy policy—not just as a climate issue, but as a matter of economic security, investment attractiveness, and long-term growth.

Egypt is taking its first steps in the solar energy sector, yet the message is unmistakable: by combining appropriate resources, advanced technology, and global assistance, renewable energy has the potential to significantly transform the region’s energy scene.

As development progresses, the Obelisk initiative might set an example not just for Egypt, but also for other countries encountering comparable energy and economic issues—emphasizing the significance of sustainable infrastructure as both a remedy and a strategic opportunity.