In recent years, Egypt has grappled with severe energy shortages, triggering widespread blackouts and slashing of energy supplies to vital industries, with significant ramifications on social stability and limiting prospects for economic stabilization. In this context, the state is making efforts to leverage new approaches to its partnerships with international donors. Recently, this has included getting on board with the European Union’s attempts to externalize its border control efforts in exchange for energy financing, promising over €300 million to support Egypt’s transition to renewable energy.
As such, the Egyptian government aims to invest in the country’s nascent green energy sector, a term which describes energy derived from renewable resources such as solar, wind, and water, often termed renewable energies. This comprises an ambitious goal to mobilize over $10 billion in private investment for renewables, including wind and solar energy production, to source 42 percent of the country’s energy production by 2030. However, recent reporting reveals that the initiative has mobilized less than half of the expected investments to date (around $4 billion), while underlying infrastructure challenges remain.
In response to the initial lackluster funding response, Egypt is trying to attract private investors into its nascent green energy sector by offering tax incentives, free land, cash rebates, and more. Such approaches do little to tackle the necessary reforms needed to ensure Egypt can benefit from the green energy it produces. Instead, they risk imposing additional costs on the state at a time when it is already struggling to finance public services and provide energy, water, and healthcare to local communities.
Who stands to benefit from Egypt’s green energy ‘surplus’?
The Nexus of Water, Food and Energy platform (NWFE), launched in 2022 at COP 27 in Sharm el-Sheikh, serves as Egypt’s primary mechanism for green energy investment. Support has been pledged via the platform from various international donors and financial institutions, with Germany and the European Bank for Reconstruction and Development leading such efforts.
The NWFE’s approach to green energy is threefold: 1) decommission fossil fuel power generation infrastructure which produces energy that emits carbon, 2) adapt the national energy grid to be more efficient and compatible with green energy sources, with an emphasis on solar and wind, and 3) mobilize at least $10 billion worth of private investment for green energy production. While the platform emphasizes the need to reduce Egypt’s dependency on carbon-emitting energy sources such as coal, oil, and natural gas, the state is simultaneously pursuing expanded gas extraction to address its energy crisis, revealing a fundamental tension in the country’s green energy strategy.
To attract investment, the state is offering a range of privileges for green investors. For solar and wind projects, the Egyptian government offers up to a 50 percent discount in corporate taxes for investors up front, as well as cash rebates if installations are productive within a certain period of time. For instance, investors can receive up to half their development-period taxes back if projects become operational within six years. The state also offers competitive feed-in tariffs, which guarantee fixed and often above-market rates for the energy produced by investors. Green investors are also being offered free access to government-owned land to be used for solar and wind farms. While such incentives are perhaps useful for ramping up Egypt’s production of renewable energy in the short term, they raise questions about how the state will finance such rebates and absorb the costs of such discounts it offers to investors amidst already struggling currency reserves.
More broadly, this approach shifts the financial burden of green energy development from private investors to the Egyptian state and its citizens
More broadly, this approach shifts the financial burden of green energy development from private investors to the Egyptian state and its citizens, as the government forgoes tax revenues it could accrue from green investment, while bearing additional costs for green energy infrastructure. Such approaches have been a common tool to incentivize renewables investment for the European Union’s own green transition, but such policies have faced roadblocks when states reverse them, leading to disputes between investors and governments. In June, Spain agreed to pay $27 million to a green energy investor to settle a dispute after the country decided to cancel previously promised feed-in tariffs. The decision prompts questions with regard to the longevity of such incentives in Egypt as the state faces budget deficits and financing challenges. Disputes with investors could drive up costs for the state, further restricting financing for much-needed public services. The promise of free land for green energy investment could also incentivize land grabs, as developers or the state seek to secure lucrative areas for renewable projects. This presents particular risks for people living in informal communities on state-owned land or those living in rural areas as they may lose access to farmland as the state expands its green energy projects.
Transitioning from gas debts to renewable debts
This model mirrors an approach long taken by the state to incentivize investment in the oil and gas industry, where it offers exceptions and incentives to encourage companies to boost their extraction and investment in Egypt. In recent years, such deals have reduced Egyptian ownership over local gas reserves and greatly increased the fees owed by the state to foreign companies.
In May 2025, Egypt paid $1.2 billion in dues to gas and oil companies to begin paying back the incentives offered over the years. Debts to oil and gas companies remain as high as $3.5 billion, even after the recent payment. The rate is significant when considering that such debts amount to roughly 7 percent of Egypt’s overall foreign currency reserves, which reached $48.7 billion in June 2025. The scale of this financing burden highlights the difficulties of breaking free from costly dependency cycles between the state and investors. While the state is already struggling to pay hefty dues owed to investors in fossil fuel sectors, it is copying the dynamic with green investors, raising questions about how it would pay future debts in both the renewable and non-renewable energy sectors.
Putting the cart before the horse
The NWFE platform aims to establish Egypt’s global leadership in the renewable energy sector, and some renewable projects have already won awards for being stand-out examples of the green transition in Africa. Such efforts should indeed be celebrated as a first, crucial step in reducing Egypt’s dependencies on industries driving the worst effects of climate change. Yet these success stories tend to overshadow the remaining questions which must be addressed in order for renewables to serve as a viable and truly sustainable energy option for Egyptian consumers and local industries.
Ensuring the national grid is compatible with green energy is a crucial first step in this process. This involves investing in the capacity to store energy and adapting grid infrastructure to more irregular flows of energy. For instance, much of the solar energy produced today is lost because grids are unable to handle the energy produced during peak sun hours and the high fluctuations in energy supply across seasons.
Grid challenges are not unique to Egypt. Recent studies have found that upgrading the German electricity grid to accept green energy will cost the country €650 billion by 2045. Supply shortages and financing constraints to invest in grids are indeed limiting green transitions around the world, particularly in Global South countries.
While the government seeks to mobilize large-scale funding for renewable energy production, it lacks a clear strategy for integrating this capacity effectively and equitably into national energy infrastructure
Infrastructure and technical capacity limitations have been cited as key barriers to Egypt’s green transition. These include the need for local expertise in green energy, difficulties establishing adequate pricing plans for green energy production, and issues acquiring the technology needed for local grid systems. Yet, the strategy for overcoming those obstacles remains highly opaque. Projects to invest in the grid have been valued at over $1.3 billion in the latest NWFE reporting, but who will fund such investments, the expected timelines, or the percentage of costs this amount covers remain unspecified. Questions also remain about how such a plan may soon contradict with Egypt’s parallel efforts to also expand natural gas extraction.
Additional servicing costs paid to private investors, such as through the promises of cash rebates and tax reductions, could further constrain the state’s ability to address these questions. These dynamics show fundamental tensions within Egypt’s nascent green energy sector. While the government seeks to mobilize large-scale funding for renewable energy production, it lacks a clear strategy for integrating this capacity effectively and equitably into national energy infrastructure. Financial incentives to attract private investors in the absence of explicit planning for the national grid in particular risks putting the cart before the horse.
Disrupting the trajectory
In the interim, the discounts offered to green energy investors will drive up costs and financing burdens for the state. If the national electricity grid remains unequipped for green energy, investors may be encouraged to export such energy to international markets which could drive up the costs for average consumers in Egypt. Without specific incentives for investors to prioritize local use of the energy produced, the green energy transition could paradoxically worsen energy access in Egypt, particularly for rural and low-income communities who already struggle with rising energy costs and reduced reliability in state energy systems. European countries in particular would be inclined to accept renewables to address energy supply gaps. Indeed, the export potential for green energy from North Africa is a key point of interest for Europe, as it plans to build ‘clean energy pipelines’ in order to receive green energy produced in Egypt, Tunisia, and Morocco in the coming years.
Changing course is needed so that Egypt’s renewable sector may first and foremost address local needs
Changing course is needed so that Egypt’s renewable sector may first and foremost address local needs. This starts by ensuring that national grids are fully compatible with green energy sources before focusing on export markets, and ensuring that private investors are investing effectively in the national grid. It also entails supporting localized investment into the energy transition, such as by enabling smaller Egyptian firms to invest in renewables over. Incorporating community-based planning efforts into renewable energy programs can also help improve transparency issues currently prevalent in the sector, such as through community consultation processes to discuss the recent incentives being offered to private investors.
Financing for the green transition must also not be limited to renewable energy. Instead, it must consider the most immediate climate and ecological challenges facing Egypt, such as rising temperatures and increased regularity of droughts, and the risks they pose for local communities, ecologies, and food systems in the years to come. Prioritizing investment in renewables in lieu of holistically addressing such issues would undermine Egypt’s efforts to become a leader in the green transition. Without such engagement, renewable investments risk tokenizing the green transition while average Egyptians bear the brunt of climate change.
Haley Schuler-McCoin is a Senior Inclusive Economies Associate at TIMEP, focusing on climate finance.