Egypt's Energy Storage Battery Plan Relies on Chinese Development Banks and Manufacturers

Egypt is planning to increase its battery energy storage capacity from the current approximately 500 megawatt-hours to 13.85 gigawatt-hours by 2030, aiming to attract $3 billion in investment to achieve this, according to a senior government official who spoke to Enterprise’s morning newsletter. The official believes that the importance of storage stems from the national grid’s current inability to accommodate new capacities, although a developer and an analyst told us that the grid does not represent a constraint of that magnitude. On the investment front, all storage projects with announced financing structures that we have identified to date are supported by institutions specializing in development finance, while Chinese partners are behind most of the battery factories announced so far.

Storage represents the next challenge for a plan targeting the addition of 20.8 gigawatts of renewable energy by 2030, according to the official, who noted that currently operating renewable capacities stand at approximately 9.6 gigawatts. The government has also moved up the target for renewable energy’s contribution to the electricity mix to 45% by 2028, instead of 42% by 2030. The official stated that the national electricity grid cannot currently accommodate new capacities but is expanding, while batteries store surplus electricity and return it to the grid when needed.

Diala Hawala, a program manager at the Carbon Institute, a research organization focused on energy, views storage as just one tool among many. Drawing on the experiences of markets that rely on off-grid renewable electricity solutions, such as Lebanon, Hawala stated that “grid capacity is not the main barrier,” emphasizing that the expansion of storage projects must be accompanied by demand management and improvements in energy efficiency.

Similarly, Scatec stated that the issue of curtailment of renewable energy generation, or the waste of surplus power, has not yet emerged in Egypt, according to Mahmoud Sheta, the company’s vice president of business development in Egypt, in an interview with Enterprise’s morning newsletter. Sheta does not expect this to change in the near future, given that renewable energy saves the government the cost of importing liquefied natural gas.

The targets provide confidence to suppliers and financiers, but “a target alone achieves nothing” without supporting policies and bidding mechanisms, according to Hawila, who added that the appropriate scale of storage depends on curtailment rate analysis, power grid state modeling, economic factors, demand, and demand-side management measures. In contrast, Sheta believes that the expansion of storage will proceed in parallel with renewable energy; as long as the government continues to add more renewable capacity, it will continue to add more batteries to support this capacity. The ministry has not yet published its 2028 demand forecasts, capacity factors, or expected curtailment rates, as we noted in August.

The government aims to attract $3 billion in investment to support storage projects, according to the official, who added that the government now requires investors in every new renewable energy project to study the addition of dedicated storage capacity. This condition follows the Independent Power Producer (IPP) model, under which a private sector developer finances, builds, and operates the plant, selling its electricity output under a long-term contract.

Development finance institutions are present in every financing structure: The Nefr Minya project combines approximately 1 gigawatt of solar capacity with 600 megawatt-hours of storage capacity. It has secured a debt financing package worth up to $566 million, which accounts for roughly three-quarters of its total cost of $764 million, as we noted last October. The European Bank for Reconstruction and Development (EBRD) leads the financing package by providing a $160 million loan, alongside up to $30 million in concessional financing from the Clean Technology Fund. Meanwhile, the Jordan Development Bank is providing $75 million, according to the EBRD. The remainder of the financing package is being provided by the German Investment and Development Corporation (GIZ) affiliated with the KfW Development Bank, the Dutch Enterprise Development Bank, and Proparco, an agency of the French Development Agency, as we previously reported.

Similarly, all loans for the first phase of the Dendera project were provided by development banks. The 569-megawatt solar power plant, equipped with 100 megawatt-hours of battery storage, is receiving $217 million in loans from the EBRD, the African Development Bank, and the European Investment Bank. This amount represents approximately 80% of the project's capital expenditure of $271 million, according to a statement by Scatec last October.

The Obelisk project, which is currently operating at full capacity, was financed in a similar manner. The European Bank for Reconstruction and Development, the African Development Bank, and the UK’s International Investment Fund were set to provide $479.1 million, or approximately 80% of the $590 million cost of the 1.1-gigawatt solar power plant, which includes 200 megawatt-hours of storage capacity, according to the European Bank in 2025. Similarly, the Abidos 2 project by Eemaa Power, with a storage capacity of 600 megawatt-hours, relies on approximately $570 million in debt from several institutions, most notably the International Finance Corporation, as announced by Eemaa in December 2025.

The European Bank for Reconstruction and Development is also set to become a shareholder. It has signed an agreement to acquire a 40% stake in a platform affiliated with SCATEC, which holds interests in projects including Obleisk, Dendera, and Energy Valley, committing to invest up to $221 million, as we reported last October. SCATEC stated that it has signed letters of intent with a consortium of several development finance institutions to arrange long-term financing for the Energy Valley project, which includes an energy storage capacity of 3.9 gigawatt-hours and is expected to reach financial close by the end of 2026. However, one project remains without a disclosed funder, as the Ministry of Electricity announced last August that it intends to establish independent storage stations with a total capacity of 4 gigawatt-hours, to be funded in Egyptian pounds.

On the equipment front, the government official expects further Chinese investment, noting that the global energy crisis may prompt more Chinese companies to relocate their manufacturing operations outside of China. Among the factories we have identified, Sungrow is building a plant in Suez to produce energy storage batteries with an annual capacity of 10 gigawatt-hours. Additionally, UAE-based Emaar Power intends to establish a battery manufacturing facility with an annual capacity of 3 gigawatt-hours in partnership with Gotion High-Tech, while local company Kemet plans to build a plant with an annual capacity of 5 gigawatt-hours in collaboration with Corunex. Furthermore, the plant of BME, backed by a local automotive company, will rely on cells from China’s CATL. Meanwhile, Russia’s Rosatom, which plans to locally assemble battery energy storage systems with an annual capacity of 500 megawatt-hours in partnership with local company TeleTech, is the only one without a Chinese partner.

Skatek is issuing separate tenders for each project to evaluate battery suppliers, "whether these battery suppliers are in Egypt or in China," as long as they offer advanced technologies and experience from reputable global manufacturers, according to Shta. He explained that lenders consider the supplier's track record, technical specifications, and warranties, adding that they also require the supplier to pass anti-money laundering due diligence checks on supply chains, including battery manufacturing methods.

Cutting off financing is the easiest thing that can happen: Hawila stated that relying on partners, whether in financing or technology, is "the most dangerous thing," adding that "cutting off financing is the easiest thing that can happen." She explained that borrowing in foreign currencies becomes more costly for Egypt over time as the value of the Egyptian pound declines. According to the European Bank for Reconstruction and Development, the power purchase agreement for the Obelisk project has a 25-year term, is denominated in US dollars, and is backed by a sovereign guarantee. Similarly, the Dendera project's contract is also backed by the same government guarantee, according to Skatek.

Electricity contracts in Egypt typically pay developers the majority of their receivables in US dollars, according to Schta, while allocating a smaller portion in Egyptian pounds to cover local costs, such as those associated with contractors and procurement. Schta believes that concluding contracts fully denominated in pounds is "feasible," stating, "The issue is simply a matter of pricing the risks." However, this would require loans in pounds, which he describes as "extremely expensive" following the Central Bank's latest interest rate hike, and could cost the government more than a dollar-denominated contract. He added that aligning the contract currency with the financing currency shields developers and lenders from significant foreign exchange risks.