Solar energy and batteries prevent Egypt's power outages

Solar energy and batteries prevent Egypt's power outages

to deal with the energy crisis.

The obelisk project in Nagaa Hammadi

The Obelisk project, being built in Nagaa Hammadi, combines 1.1 gigawatts of solar production with 200 megawatt hours of battery storage. With an investment volume of $590 million, the project is being realized by Scatec, a Norwegian renewable energy company that operates primarily in emerging markets.

Scatec already operates four other renewable projects in Egypt, and the North African country aims to increase its share of renewable energy production to 13% in 2023 42% by 2030 to increase.

Egypt's energy supply and challenges

Approximately three quarters of Egypt's electricity comes from gas. However, domestic production has fallen in recent years, leaving the country increasingly dependent on imports and rising gas prices, leading to repeated power outages.

Demand for renewable energy is growing in emerging economies that are most affected by rising fuel prices. Terje Pilskog, CEO of Scatec, said: "With renewable energies you are not dependent on imports of fuel. It is also about predictability."

The potential of renewable energy in Africa

According to the Global Solar Council 60 percent of the best areas in the world for solar use in Africa. Yet in 2023, only 3% of the continent's energy came from solar. In 2024, 75% of all new solar projects were built in South Africa or Egypt; however, 18 African countries have the potential to install more than 100 MW of solar projects in 2025. The continent's goal is to reach 300 GW of solar capacity by 2030 - more than the US's current capacity.

Despite the search for new domestic gas resources, Egypt has set ambitious renewable energy targets and hosted the COP27 climate conference in 2022. But the drive behind these projects is economic, not environmental, explains Karem Elgendy, executive director of the Carboun Institute Elgendy, an energy and climate think tank in the Middle East and North Africa.

The effects of climate change on energy supplies

Egypt is struggling to maintain electricity supply due to its over-reliance on gas and declining returns from the significant Zohr gas field. In May and June the country made an offer to import almost two million tons of heating oil to cover electricity needs as gas imports became too expensive. Demand increases, particularly in summer, as air conditioning is turned on to combat the intense heat - average temperatures can reach up to 42 degrees Celsius (108 Fahrenheit) in the south. Prime Minister Mostafa Madbouly recently called on the population to... to reduce energy consumption to avoid power outages.

The “Magic Solar Belt” of Egypt

While Egypt's summer heat increases demand for electricity, it could also provide a solution. The south of Egypt, where Scatec's new project is being built, is “in the magical solar belt,” explains Elgendy. According to the Global Solar Atlas, Egypt has this fourth highest Potential for solar energy (photovoltaics) worldwide.

Historically, solar energy has been limited due to its intermittent availability - solar panels only work during the day and large-scale battery storage has been too expensive. However, thanks to falling battery prices and lower operating and installation costs of solar energy, projects that combine solar power with battery storage, like Obelisk, could overcome these problems.

Economic prospects and investments

Because of its size and optimal location, Elgendy said, Obelisk could "demonstrate value to the entire region and the world that 'solar plus batteries' can overcome this primary weakness."

The cost of battery storage projects is decreased by 89% from 2010 to 2023, which is due to increasing production capacity, particularly in China. Elgendy explains that this development means that by 2027 solar and battery systems will be “the cheapest form of (any) electricity generation.” A report from the Global Solar Council finds that the availability of energy storage is “a key driver of global solar energy installation.” However, while the global storage capacity for batteries 363 gigawatt hours (GWh) reached in 2024, Africa only has 1.6 GWh.

Although battery costs have fallen and solar energy is cheap to operate, the construction of such systems still requires large investments. These funds are often difficult to find because the “risk premium” for investing in developing countries means that these projects are more expensive in Africa. The continent attracted just 3% of global energy investment in 2024.

The Obelisk facility will receive $479.1 million in financing from the European Development Bank, the African Development Bank and British International Investment. The first 561 MW of solar power and total battery storage capacity are expected to be commissioned in the first half of 2026, reaching full capacity of 1.1 gigawatts by the end of the year.