Europe’s hydrogen import strategy is increasingly colliding with a practical constraint in partner countries: grid capacity. That tension is visible in the European Commission’s decision to back two renewable energy projects in Egypt worth roughly €124.3 million, splitting funding between export oriented hydrogen derivatives and domestic grid reinforcement.
The allocation signals a growing recognition in Brussels that clean molecule supply chains are only as credible as the power systems that feed them.
Of the total package, about €34.3 million is earmarked for the Sokhna green ammonia project, while roughly €90 million will support Egypt’s Grid Modernisation and Expansion program, designed to enable the integration of 22 GW of clean energy into national grids by 2030. The imbalance in funding between production and infrastructure is notable. While hydrogen and ammonia projects tend to dominate headlines, grid limitations remain one of the most persistent barriers to scaling renewables in North Africa.
The projects fall under the Trans Mediterranean Renewable Energy and Clean Tech Cooperation Initiative, or T MED, within the broader Pact for the Mediterranean framework led by the European Commission. Beyond public funding, the Pact aims to mobilize private capital through a planned T MED Investment Platform, targeting renewable generation, electricity networks, and clean technology manufacturing. For Egypt, this blended finance approach reflects the scale of investment required to reconcile domestic demand growth with export ambitions.
Sokhna has emerged as a focal point for Egypt’s hydrogen and clean manufacturing strategy, driven by proximity to shipping infrastructure and the Suez Canal. Green ammonia production there is intended primarily for export, aligning with European demand for low carbon fuels in shipping and industry. However, green ammonia economics depend on stable, low cost electricity supply, which in Egypt’s case still relies on a grid undergoing rapid transition. Without parallel investment in transmission and system flexibility, electrolyzers risk underutilization, undermining project economics.
The grid modernization component directly addresses this bottleneck. Integrating 22 GW of clean energy by 2030 implies a sharp increase from current renewable capacity and requires upgrades in transmission, substations, and system management. Egypt’s power system has historically been centralized and fossil fuel heavy, meaning variable renewable integration introduces operational challenges that cannot be solved by generation assets alone. From a European perspective, supporting grid upgrades reduces the risk that export focused hydrogen projects draw political or technical resistance due to domestic power shortages.
Industrial development is also accelerating in Sokhna. In December 2025, Egypt began construction of the ATUM Solar integrated industrial complex, backed by approximately $210 million in investment. Located on a 200,000 square meter site at TEDA Egypt within the Suez Canal Economic Zone, the project brings together JA Solar, Egypt’s AH, UAE based Global South Utilities, and Bahrain’s Infinity Capital. While not directly part of the EU funding package, the timing underscores how manufacturing, renewable generation, and export infrastructure are converging geographically.
