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The pharaonic exports potential of Green Hydrogen for the Egyptian Energy Hub

As Egypt’s Energy Strategy 2035 is updated to include green hydrogen, local production of renewable fuel has made huge strides through MoUs and partnerships between international companies and government institutions.

As we have seen in the last years, the energy sector in Egypt has been steadily shifting away from oil extraction toward Natural Gas production. Yet this trend is being surpassed by a far more ambitious initiative. Egypt is focusing attention on renewables and a clear example of this is the government’s 2030 Vision, in which renewable energy sources are going to be the backbone of the Egyptian energy mix.

In this respect, the gaining relevance of Green hydrogen fits perfectly within Egypt’s 2030 Vision initiative, which seeks to raise the energy sector’s participation in the nation’s GDP, maximise local energy resources, promote transparency and reduce power generation’s carbon footprint. Indeed, the Egyptian government aims to have a share of 60% renewable energy in the country’s energy mix by 2040.

To this end, President Abdel Fattah El Sisi has called several times for the creation of an integrated national strategy for hydrogen production in cooperation with different state sectors and to update Egypt’s Energy Strategy 2035 to include green hydrogen. A revised strategy will surely empower Egypt to generate and use hydrogen while adopting international know-how within the emerging local sector.

Egypt has clear competitive advantages that lay the path for a hydrogen-based economy to succeed. To begin with, there is strong political support for this strategy, with a proposed dedicated board and cross-ministerial committee to ensure the proper execution of hydrogen development.

In addition, there is an abundance of local natural gas for feedstock to produce blue hydrogen, high potential for solar and wind energy, and prospects of second-generation biomass production for green hydrogen. More importantly, the country boasts competitive costs for renewable energy generation. In terms of consumer markets, Egypt houses a domestic market consisting of mature industrial sectors and clusters of industrial zones spread across the country.

The nation has a stable network of gas pipelines and significant port infrastructure on the Mediterranean and Red seas to be used for exporting hydrogen. On top of its available support assets, it has vacant land primed for renewable energy generation.

More relevant for the development of such an industry, Egypt has strategic proximity to EU markets, which is expected to attract key stakeholders in the country’s future hydrogen economy. Also, the local petrochemical sector has experience with hydrogen technology through steam methane reforming for ammonia production and electrolysis for polyvinyl chloride production. Government-led programmes are already in place to deepen local content and advance Egypt’s design and construction capabilities through partnerships with leading technology providers.

In this regard, the Egyptian government has signed several international partnerships that will kick-start its hydrogen economy. In January 2021, the government signed an agreement with Siemens to develop a pilot project involving green hydrogen production. The following March, an agreement was signed with Belgium’s DEME Group to conduct studies on production. In July 2021, Eni signed an agreement with the Egyptian Electricity Holding Company and the Egyptian Natural Gas Holding Company to conduct joint projects to produce green hydrogen and blue hydrogen.

In August 2021, the Egyptian Electricity Holding Company and Siemens signed an MoU to jointly develop a hydrogen-based industry in the country with export capabilities. The first project under the agreement is a pilot electrolyser with a capacity of upwards of 200 MW aimed at testing the regulatory environment and logistics.

In October 2021, The Sovereign Fund of Egypt, Norway’s Scatec and Fertiglobe, a partnership between chemicals company OCI and Abu Dhabi National Oil Company, signed an agreement to develop the world’s largest green hydrogen project. The facility will produce upwards of 100 MW and use green hydrogen as feedstock to produce 45 tonnes per year of green ammonia. The asset will be located next to Egypt Basic Industries Corporation’s facilities in the Ain Sokhna industrial zone. Construction is set to be fast-tracked so the working facility can be showcased during COP27 in Sharm El-Sheik in November 2022.

In April 2022 Egypt also signed another MoU with UAE’s MASDAR for the promotion of green hydrogen projects and for targeting European markets in the upcoming years. Indeed, The projects in Egypt are aiming for an electrolyser capacity of 4 gigawatts by the year 2030, with a production of as much as 480,000 tons of green hydrogen annually.

Egypt’s proposed hydrogen hub will have multiple socioeconomic impacts on the country. Employment opportunities will rise during construction and development operations, while dealings with international entities will increase local know-how, raise practices and see larger investments in human capital. Local academia and research centres will profit from R&D investments and raise competencies in next-generation technologies.

Additionally, it will promote downstream investments and raise feedstock for blue and green hydrogen. A hydrogen hub will contribute to Egypt’s overall GDP growth and increase the share of renewables in its energy mix to meet the government’s 2040 target. All in all, the country seems set to profit off the global hydrogen race as Egypt moves into the next phase of its energy transition.