Egypt has emerged as an unexpected focal point for global investment in battery energy storage systems, with development finance institutions and private investors committing over $2 billion to projects that promise to transform the country’s electricity infrastructure and position it as a regional renewable energy hub.
The surge in investment comes as Egypt grapples with fundamental challenges in its power sector — chronic electricity shortages that resulted in daily blackouts throughout 2024, an economy heavily dependent on natural gas exports for foreign currency, and ambitious targets to source 42 per cent of its electricity from renewables by 2030.
Last week, British International Investment committed $37 million to the Abydos II Solar PV and Battery Energy Storage System project, joining a consortium that includes the International Finance Corporation, Germany’s DEG, the Dutch FMO, Italy’s Cassa Depositi e Prestiti, the OPEC Fund for International Development, and Europe Arab Bank. The $737 million facility will be one of Africa’s largest integrated solar and battery storage installations when operational in 2026.
How battery storage works
Battery energy storage systems function as large-scale electrical reservoirs that capture excess electricity when generation exceeds demand and discharge it when consumption outpaces supply. In Egypt’s context, these systems charge during midday hours when solar panels produce peak output but electricity demand remains moderate. The stored energy is then released during evening hours when household and commercial consumption surges but solar generation drops to zero.
The technology employed in Egypt’s utility-scale projects predominantly uses lithium-ion batteries similar to those in electric vehicles, though scaled to industrial dimensions. A typical 600 MWh system can store enough electricity to power approximately 60,000 homes for ten hours. These installations consist of thousands of battery modules housed in climate-controlled containers, connected to sophisticated power conversion systems that manage the flow of electricity to and from the grid.
For grid operators, battery storage provides multiple services beyond simple energy shifting. The systems can respond to frequency fluctuations within milliseconds, helping stabilise grid voltage and prevent cascading failures. This capability proves particularly valuable in Egypt, where aging transmission infrastructure and rapid demand growth create operational challenges. Battery systems can also defer costly investments in conventional power plants by meeting peak demand without requiring new gas turbines that would sit idle during off-peak hours.
The economics have shifted dramatically in recent years. Lithium-ion battery costs have declined by approximately 90 per cent since 2010, making solar-plus-storage projects competitive with conventional generation in markets with adequate sunlight. Egypt’s location in the sun belt, with solar irradiation levels among the highest globally, enhances the economic case for integrated renewable and storage facilities.
Grid crisis drives urgency
The investment wave follows a difficult period for Egypt’s electricity sector. Throughout summer 2024, the country implemented daily power cuts lasting two to three hours as surging demand collided with insufficient natural gas supplies. The crisis exposed a fundamental tension in Egypt’s energy policy: the government’s need to export natural gas for foreign currency has repeatedly clashed with domestic electricity requirements.
Prime Minister Mostafa Madbouly acknowledged in June 2024 that Egypt lacked fuel rather than generation capacity, prompting the government to import $1.18 billion worth of fuel to stabilise supplies through the summer months.
The power crisis had cascading effects across the economy. Businesses reported significant losses, particularly in frozen food sectors, while fluctuating power damaged expensive electrical equipment. Rural areas experienced disproportionately longer outages than officially announced, and reduced street lighting raised safety concerns.
Battery storage systems offer a solution to Egypt’s dual challenge of integrating intermittent renewable energy while maintaining grid stability during peak demand periods, particularly during summer evenings when solar generation drops but electricity consumption remains elevated.
Accelerating deployment
Egypt commissioned its first utility-scale battery storage facility in July 2025, when AMEA Power brought online a 300 MWh system integrated with its 500 MW solar plant in Aswan Governorate. The facility was delivered ahead of schedule and marked Egypt’s first utility-scale storage project in North Africa.
The momentum has continued with multiple large-scale projects reaching financial close. In June 2025, the African Development Bank approved a $184.1 million financing package for the Obelisk project in Qena Governorate — a 1 GW solar plant coupled with a 200 MWh battery system. The total investment exceeds $590 million and represents the largest solar power plant in Africa.
Additional projects in the pipeline include AMEA Power’s Abydos II facility with 1 GW of solar capacity and 600 MWh of battery storage, and a recently approved Scatec project featuring 1.7 GW of solar capacity with 1,500 MWh of energy storage across multiple sites.
Combined, these projects will add approximately 2.7 GWh of battery storage capacity to Egypt’s grid by late 2026 — a scale that places the country among the fastest-growing battery storage markets in emerging economies.
Strategic positioning
Egypt’s renewable energy push extends beyond domestic needs. The country is developing electricity interconnections with Greece, Italy, and potentially other European markets, positioning itself to export clean energy as Europe seeks to diversify supply sources.
The GREGY Interconnector with Greece will transmit 3,000 MW of renewable energy via an undersea cable expected to be operational by 2030, with an estimated cost of $4.5 billion. A proposed Italian interconnection could cost up to $20 billion and span approximately 2,800 kilometres.
These export ambitions require demonstrating consistent supply reliability — precisely what battery storage enables by smoothing the variability inherent in solar and wind generation.
The government has streamlined approvals through its Golden License mechanism, introduced in 2022, which consolidates land acquisition, construction, and operational permits under a single authorisation. This has accelerated project timelines and attracted developers seeking faster deployment.
Financing landscape
The financing structures reflect the evolving nature of infrastructure investment in emerging markets. Development finance institutions are providing concessional capital to reduce project costs and attract commercial lenders.
British International Investment’s financing for the Obelisk project includes a $100 million concessional loan and a $15 million returnable grant that helps lower the overall cost of battery storage, making it more financially viable while attracting private sector participation.
The European Bank for Reconstruction and Development has emerged as a leading partner, providing equity bridge loans, senior debt, and coordinating with the European Union’s investment mechanisms. The EBRD has committed €200 million to upgrade Egypt’s transmission infrastructure, including a high-voltage line to evacuate more than 2.1 GW of renewable energy from the Gulf of Suez region.
Kevin Kariuki, African Development Bank vice president for power, energy, climate and green growth, characterised the Obelisk project as demonstrating how strong partnerships and innovative solutions can balance energy security, affordability, and sustainable development goals.
Market dynamics
The rapid deployment of battery storage in Egypt mirrors broader global trends as costs decline. Energy analysts note that utility-scale battery costs have fallen to approximately $65 per MWh outside China and the United States, making solar-plus-storage economically competitive with conventional generation.
The Middle East and Africa stationary battery storage market is projected to grow at a compound annual growth rate of 25.3 per cent from 2024 to 2031, with Egypt representing one of the fastest-growing segments.
However, challenges remain. Egypt’s power sector generated approximately 90 per cent of electricity from fossil fuels in 2024, with deployment of renewables hampered by grid constraints and currency devaluation that increases the cost of imported components.
Grid infrastructure upgrades are proceeding alongside generation projects. The Egyptian Electricity Transmission Company is implementing a comprehensive modernisation programme to accommodate the targeted renewable capacity, though some analysts question whether infrastructure expansion can keep pace with generation additions.
Regional implications
Egypt’s battery storage buildout is being closely watched across Africa, where many countries face similar challenges of integrating renewable energy while maintaining grid reliability. The Africa Finance Corporation has positioned Egypt as a cornerstone of its renewable energy strategy, backing multiple developers and platforms.
Sameh Shenouda, executive board member and chief investment officer at AFC, emphasised that recent financings demonstrate growing momentum in mobilising large-scale global investment into African-led infrastructure projects. The corporation secured $153 million in senior debt for a separate 200 MW wind farm project in October 2025, reflecting sustained international confidence.
The successful deployment of utility-scale battery storage could establish Egypt as a model for other African nations seeking to accelerate energy transitions while managing fiscal constraints. However, execution risks remain substantial given Egypt’s macroeconomic challenges and history of project delays.
For investors, the opportunity represents a convergence of development impact, attractive returns from long-term power purchase agreements denominated in dollars, and strategic positioning in a country with significant renewable resources and export potential.
Whether Egypt can maintain the current investment momentum while resolving fundamental tensions between export priorities and domestic needs will determine if the current wave of commitments translates into operational capacity that genuinely transforms the country’s energy landscape.