Egypt prepares for green hydrogen leap

Oil and gas have been shut off or redirected by Russia. On the other hand, because coal is so polluting, more nations are turning to renewable sources to meet their energy needs. As a result, nations all around the world are searching for more dependable energy sources. For the transition, various options are being tested, including green hydrogen.

In addition, Egypt has many of the many components required to develop into a hub for renewable energy, including a sizable domestic market, plenty of sunshine, and strong winds in the Gulf of Suez. The only thing still lacking was government backing, although it too has materialized recently.

“The Egyptian Wealth Fund’s involvement, prioritizing brine treatment for green hydrogen, and encouraging special economic zones were crucial steps,” said Heike Harmgart, managing director of the European Bank for Reconstruction and Development’s southern and eastern Mediterranean region.

During the COP27 climate conference, which will be held in the Egyptian resort of Sharm el-Sheikh from November 6 to 18, experts anticipate framework agreements on a number of memoranda that have already been signed with worldwide businesses. During the seminar, Harmgart also mentioned that the Egyptian government would be announcing its green hydrogen policy.

Rising international interest in Egypt

The European Bank for Reconstruction and Development, which is based in London and provides funding for such projects, also highlighted the interest of the businesses in the project. This interest is also confirmed by Indian investors.

According to Sumant Sinha, CEO of ReNew Power, one of India’s major renewable energy businesses, “We are working with the Egyptian authorities to come up with a framework agreement for COP27.” According to Sinha, the project’s detailed work should be finished within the next three to six months. By the middle of 2023, ReNew Power, which intends to invest more than $7 billion (€7.11 billion) in hydrogen projects in Egypt, is anticipated to make its investment choice.

Regarding the government’s plans for renewable energy, energy consultant Ali Habib from Cairo stated: “We have allotted massive lands along the Nile River for wind and photovoltaic (solar), larger than Singapore’s area. Just to transport this environmentally friendly electricity to the Ain Sokhna port’s hydrogen project Special power lines will be available for usage in

Another business rumored to be prepared to sign a contract in November is Scatec. The Egyptian Wealth Fund, the Egyptian construction firm Orascom, and the United Arab Emirates-based Fertiglobe are all partners in the development of the 100-megawatt green hydrogen project that the Norwegian renewable energy company is working on.

A Scatec representative stated, “With our partners, we are in the early stages of development to establish a 1 million ton per year green ammonia plant in Egypt.

Acquiring fresh partners

Egypt, a nation in North Africa, aims to reach agreements with businesses that are not based there while continuing to have positive ties with nations like the EU, Japan, China, and Russia. Investments in this situation are probably going to come from the UAE, Saudi Arabia, Australia, and India.

Cairo has worked hard to produce this diversity. Egypt is attempting to forge new relationships with the world to lessen its reliance on Europe while also attempting to define the geopolitical position it plays by serving as an example of growth for the rest of the African continent.

However, the EU remains Egypt’s most likely destination for ammonia exported as hydrogen.

According to Rajat Sexaria, CEO of India’s ACME Group, “green ammonia from Egypt will likely travel to consumers in Europe and the Far East.”

Both industry leaders and experts concur that the European market is significantly closer and more lucrative.

According to Habib, co-author of a report on Egypt’s hydrogen goal published by the Oxford Institute for Energy Research, “the fundamental barrier for hydrogen is storage and transit, not generation.”

There are challenges

Experts predict that Egypt’s green initiatives will help the growth of wind energy during the next few years. However, several wind turbine manufacturers have recently been having issues.

Australian Fortescue Future Industries, one of the firms that inked a hydrogen agreement with Egypt and produce essential parts for renewable energy systems, is attempting to make direct investments in Egypt. Harmgart claims that rather than using natural gas in inefficient local power plants, Egypt’s government promotes its sale to the world market. Green hydrogen, however, is not always a preferred option for Egyptian businesses.

New hydrogen market opportunities

With the EU, Egypt is now negotiating a hydrogen supply agreement. Egypt may have a part to play in the EU’s strategy for essential raw commodities, according to the European Bank for Reconstruction and Development.

The creation of special economic zones will make Egypt more appealing to a wide spectrum of investors over time, according to Harmgart.

Special economic zones make it simpler to create unique incentives for international businesses, facilitate investment, and eliminate bureaucracy. Production of local green steel could come next.

“Near the Suez Canal are some of the biggest steel plants. This makes it easier to produce and deliver clean hydrogen to steel factories. Transporting hydrogen is a challenge for nations without domestic production capacity, according to Soroush Basirat of the Institute for Energy Economics and Financial Analysis.