Market framework

Government electricity participants

Who are the principal government participants in the electricity sector? What roles do they perform in relation to renewable energy?

Egypt mainly has a single-buyer electricity market, with the Egyptian Electricity Holding Company (EEHC) being the main player and owner of the transmission system and almost all of the distribution assets. Under this model, the Egyptian Electricity Transmission Company (EETC), a state-owned company (previously an EEHC subsidiary), purchases electricity from all public and private generation companies and sells it to nine main distribution companies, and other private electricity distribution companies. It also directly sells electricity to a number of consumers connected to the extra-high-voltage and high-voltage networks. EETC is also responsible for power exchanges with neighbouring countries over the present interconnections.

The New and Renewable Energy Authority (NREA), established in 1986, is the arm of the Egyptian Ministry of Electricity and Renewable Energy (MOERE) tasked with developing renewable energy programmes in Egypt on a commercial scale, as well as implementing related energy conservation programmes.

The Egyptian Electric Utility and Consumer Protection Regulatory Agency (EgyptERA), established in 2000, is the independent legal entity that grants licences for the generation, transmission and distribution of electricity, and is responsible for overseeing compliance with the existing rules and regulations in the electricity sector.

Egypt aims to gradually replace the current model with a competitive market, based on bilateral contracts, together with spot, balancing and ancillary services’ markets. The Electricity Law No. 87/2015 sets the ground for this transformation, with EETC separating from EEHC and becoming independent from all electricity companies and electric utility parties, and establishing third-party access to its network, as well as allowing for the reorganisation of EgyptERA, granting it the right to approve different electricity tariffs. The Renewable Energy Law No. 203/2014 provides for different schemes for the development of renewables projects, so as to enable the government to reduce Egypt’s dependence on fossil fuels and reach its target of renewables in the energy mix.

Private electricity participants

Who are the principal private participants in the electricity sector? What roles do they serve in relation to renewable energy?

For a long time, the companies operating under the MOERE umbrella dominated the Egyptian electricity market. Private companies are now entering this market, mainly through build, own and operate projects that are particularly seen in the wind and solar PV power fields, or the FIT programme, which alone targeted 4GW of solar and wind capacity in its first and second rounds.

The launch of the FIT programme in late 2014 has positively impacted a renewables market that was rather stagnant, and created an influx of foreign direct investment opportunities in renewables projects that was unprecedented in the Egyptian electricity market. Large foreign utilities, energy providers, engineering, procurement and construction companies, operating and maintenance service providers, development finance institutions and more generally international finance institutions, as well as foreign and local commercial banks, have placed Egypt on their radar for the past four years as a country with large investment potential in renewables.

Smaller scale projects are also being developed, mainly by local companies, to generate electricity for high-level users of electricity from the private sector. The projects are either grid-connected or off-grid.

Definition of ‘renewable energy’

Is there any legal definition of what constitutes ‘renewable energy’ or ‘clean power’ (or their equivalents) in your jurisdiction?

‘Renewable energy resources’ are defined in the Renewable Energy Law as ‘natural sources of energy, which are non-depletable, and which may be used to produce electricity’.


What is the legal and regulatory framework applicable to developing, financing, operating and selling power and ‘environmental attributes’ from renewable energy projects?

On 21 December 2014, Egypt published the Renewable Energy Law, identifying four main mechanisms to reach its renewable energy targets:

  • state-owned projects with competitive bidding for engineering, procurement and construction contracts;
  • competitive bidding for build-own-operate contracts;
  • feed-in tariff; and
  • a merchant scheme, according to which independent power producers can enter into bilateral contracts to sell power directly to consumers using the national grid against wheeling and grid-access charges payable to the grid operator.

The Electricity Law requires projects set up for the generation, distribution or sale of electricity (including under any of the above schemes) to be developed through an Egyptian joint stock company. Generally, these companies must seek a preliminary then a final licence from EgyptERA to be allowed to carry out their activities.

Stripping attributes

Can environmental attributes be stripped and sold separately?

An Egyptian Designated National Authority is subordinated to the Egyptian Environmental Affairs Agency (EEAA), and includes two branches: an executive branch, consisting of the Egyptian Council for CDM (comprising representatives of certain ministries, including the Ministry of Investment and International Cooperation and the Ministry of Petroleum); and a technical branch, the Egyptian Bureau for CDM (comprising experts providing technical recommendations to the Council), which plays a role in deciding on the issuance of certified emission reduction credits.

The board of EgyptERA is ultimately responsible for ratifying the rules, conditions and processes related to the issuance and trading of all renewable energy certificates.

Government incentives

Does the government offer incentives to promote the development of renewable energy projects? In addition, has the government established policies that also promote renewable energy?

The government of Egypt offers a number of incentives and is putting in place favourable policies to promote the development of renewable energy projects in the country. The Investment Law No. 72/2017 published on 31 May 2017 grants a special investment incentive to new projects that generate renewable energy or that depend on it or the expansion of projects by the addition of new assets that increase the production capacity, consisting of a deduction of 30 per cent of the net taxable profits for the first seven years of the life of the project, subject to certain conditions such as the incentive value not exceeding 80 per cent of the paid-in capital until the start of the project’s operations, and the project company being established within three years from the date of entry into force of the Executive Regulations issued by Prime Ministerial Decree No. 2310/2017 (ie, from 29 October 2017). The Investment Law also creates a 2 per cent unified rate of customs duties for all equipment and machinery necessary for the establishment of the project (down from 5 per cent). Land may be allocated free of charge if the project company’s activity is deemed of a strategic interest; otherwise, 2 per cent of the production is generally payable yearly for land lease (based on the Renewable Energy Law No. 203/2014).

In 2013, Egypt introduced a net-metering scheme to promote distributed solar power. The scheme allows small-scale renewable energy projects in the residential and the industrial and commercial sectors (with a maximum capacity recently increased from 5MW to 20MW) to feed electricity into the low-voltage grid. Under the scheme, solar PV generation is credited against the user’s bill for consumption from the grid using a calculation method that credits surplus electricity only in the consumers’ highest tariff bracket.

In addition to the utility-scale solar projects, the FIT programme also proposed tariffs for distributed PV ranging from E£0.848/kWh for residential systems below 10kW up to E£0.973/kWh for systems between 200kW and 500kW.

Also, the merchant or independent power producer model provided for in the Renewable Energy Law allows private offtakers to enter into agreements with private power generation companies to secure the purchase of electricity from renewable energy sources.

Are renewable energy policies and incentives generally established at the national level, or are they established by states or other political subdivisions?

Renewable energy policies and incentives are established at the national level by the Egyptian government, typically through the Cabinet of Ministers.

Purchasing mechanisms

What mechanisms are available to facilitate the purchase of renewable power by private companies?

The merchant or independent power producer model provided for in the Renewable Energy Law allows private offtakers to enter into agreements with private power generation companies to secure the purchase of electricity from renewable energy sources. However, in practice, the use of such model is still in its early stages, and is typically appealing for energy intensive industries, especially in the cement sector, and for some oil and gas companies in line with their mandates subject to the Paris Agreement (within the United Nations Framework Convention on Climate Change), as well as for certain commercial electricity users looking to reduce their electricity bill.

Legislative proposals

Describe any notable pending or anticipated legislative proposals regarding renewable energy in your jurisdiction.

The framework for the set-up of commercially viable waste-to-energy projects remains in gestation, as it requires close coordination between the MOERE and the Ministry of Environment, as well as a solution to the lack of an efficient waste collection system. The low pricing is also an issue, particularly given that payment will take place in Egyptian pounds without pegging to the US dollar.

In November 2015, the Egyptian government approved FITs for refuse-derived fuel and electricity generated from solid waste at a preliminary price of E£0.92 per kilowatt hour. It was also reported to have agreed to issue grants to governorates to help subsidise recycling efforts that feed into the programme and facilitate land concessions on a usufruct basis for companies seeking to develop waste-to-energy power plants.

In 2019, NREA formed a committee comprising all electricity sector stakeholders and tasked it with the drafting of the Executive Regulations of the Renewable Energy Law no. 203/2014. The committee is aiming to complete its mandate by the fourth quarter of 2019.

Drivers of change

What are the biggest drivers of change in the renewable energy markets in your jurisdiction?

The Egyptian government has a long-term plan of diversification of the energy mix and reduction of dependence on fossil fuels, which predates the large Zohr offshore gas discovery. The targeted renewables capacity is 20 per cent by 2022.

Market observers would also identify the extreme power cuts that had affected the country during the summers following the 2011 uprising as being the soft driver behind the strong push for renewables projects in autumn 2014.

It is currently expected that the next revolution in the power sector, which will expand the use of renewable energy in Egypt, will be the wave of transformation to electric mobility.

Disputes framework

Describe the legal framework applicable to disputes between renewable power market participants, related to pricing or otherwise.

The Executive Regulations of the Electricity Law, issued by Decree of the MOERE No. 230/2016, provide for the establishment of a committee within EgyptERA for the settlement of disputes arising between the electric utility parties in relation to the utility’s activities. The committee is chaired by a state councillor and comprises technical, financial, commercial and legal members, as nominated by prime ministerial decree for a one-time renewable term of one year. The committee’s decisions must be succinctly justified, and issued within a period not exceeding 60 days from the date of the substantiated claim. The decision is then presented to the board of EgyptERA for ratification and notified to the parties.

Typical power purchase agreements entered into with EETC as offtaker would however provide for international arbitration clauses referring disputes to arbitral tribunals constituted in accordance with the Rules of the Cairo Regional Centre for International Commercial Arbitration and seated outside Egypt. According to the Egyptian Arbitration Law applicable to most such agreements, the consent of the MOERE on the arbitration clause is required for it to be valid.

Utility-scale renewable projects

Project types and sizes

Describe the primary types and sizes of existing and planned utility-scale renewable energy projects in your jurisdiction.

Large-scale 20MW to 50MW renewable energy projects are found under the FIT programme. Furthermore, certain 100MW to 600MW projects are also found in the competitive bidding scheme in the wind and PV power sectors.

Development issues

What types of issues restrain the development of utility-scale renewable energy projects?

Not applicable.


Primary types of project

Describe the primary types of hydropower projects that are prevalent.

Approximately 8 per cent of Egypt’s power comes from hydropower facilities, the first of which was built in 1960, namely the Aswan Dam, which was constructed to control the Nile water discharge for irrigation. In 1967, the 2.1GW High Dam hydropower plant was commissioned, followed by the commissioning of the Aswan 2 power plant in 1985, the commissioning of the Isna hydropower plant in 1993, and that of Naga Hammadi in 2008.

What legal considerations are relevant for hydroelectric generation in your jurisdiction?

The Egyptian legal and regulatory framework allowing the establishment of private renewable energy projects is focused on solar (particularly photovoltaic) and wind sources, and does not seem to address hydropower. Existing hydropower projects are built and owned by the Egyptian government, and there does not seem to be a particular drive to date for extending opportunities to develop utility-scale hydro projects to the private sector similar to the solar and wind fields.

Distributed generation


Describe the prevalence of on-site, distributed generation projects.

In January 2013, EgyptERA adopted a net-metering policy by virtue of Circular No. 1/2013, that allows small-scale renewable energy projects to feed electricity into the national grid. Generated surplus electricity will be discounted from the balance through the net-metering process. A number of off-grid projects is also being developed by local electricity companies for real estate developers, manufacturing facilities, telecom companies, and other commercial off-takers that want to reduce their electricity bills. Electricity distribution projects in new urban communities are also now attracting private sector investments.


Describe the primary types of distributed generation projects that are common in your jurisdiction.

Rooftop and small-scale solar power generation is being encouraged by the Egyptian government, with the FIT programme launched in 2014 dedicating 300MW of its fixed tariffs to projects of a capacity not exceeding 500kW. All electricity produced is fed into the national grid operated by EETC.


Have any legislative or regulatory efforts been undertaken to promote the development of microgrids? What are the most significant legal obstacles to the development of microgrids?

Off-grid solar power plants are encouraged by EETC, but not widespread. Most off-grid projects rely on photovoltaic technology, and hence lack the required stability and continuity of operation throughout the day. Battery storage systems are not yet commonly used in Egypt, but their use is expected to increase following the complete lifting of the subsidies on fuel and electricity tariffs by the Egyptian government started in 2016. Their expansion will also depend on the decrease in storage prices.

Other considerations

What additional legal considerations are relevant for distributed generation?

As fuel and electricity were largely subsidised by the Egyptian government, residential solar projects were not financially appealing, and the lack of solid regulatory support for such projects has since gone unnoticed. Following the lifting of subsidies, it is expected that such private-owned projects would become more common. The development of independent power producer projects on the distribution level remains challenging owing to the lack of a supporting regulatory framework. EgyptERA is currently working on filling this legislative gap.

Energy storage


What storage technologies are used and what legal framework is generally applicable to them?

Tenders for CSP projects with storage are being launched by the Egyptian government for limited capacities, most recently for development in the West Nile area in Minya, southern Egypt. The process is, however, currently pending.


Are there any significant hurdles to the development of energy storage projects?

Not applicable.

Foreign investment

Ownership restrictions

May foreign investors invest in renewable energy projects? Are there restrictions on foreign ownership relevant to renewable energy projects?

Foreign investors are encouraged to invest in renewable energy projects in Egypt. They are required to set up a project company in Egypt to develop their projects, without any shareholding nationality requirements. In effect, most private players in the Egyptian renewables market are currently foreign investors.

Equipment restrictions

What restrictions are in place with respect to the import of foreign manufactured equipment?

With the exception of mounting structures and cables in the solar power plants field, and high-voltage electric equipment and switchgear, Egypt is not considered to be a producer of main electricity generation plant equipment. For this reason, the government encourages the import of renewable energy equipment at a discounted unified customs rate of 2 per cent (versus 5 per cent typical rate) applied to all equipment and machinery required for the set-up of the plants. Also, EUR1 certificates allow renewable energy generation companies to import certain equipment manufactured in the EU at nil rate of import duty, such as solar panels, for instance.


General government authorisation

What government authorisations must investors or owners obtain prior to constructing or directly or indirectly transferring or acquiring a renewable energy project?

Electricity generation projects, including from renewable sources, must be established in the form of an Egyptian joint stock company, to be authorised by the General Authority for Investment and Free Zones, affiliated to the Ministry of Investment and International cooperation. The companies must then obtain a licence from EgyptERA for power generation, and a building permit for the construction of any concrete or fixed installations. An environmental impact assessment, approved by the EEAA, is also required. The generation licence and approval of the EEAA must be maintained valid and effective for the entire duration of the project. The transfer of renewable energy projects requires an assignment of the generation licence issued by EgyptERA, in accordance with the route traced by the Electricity Law and its Executive Regulations to this effect.

Offtake arrangements

What type of offtake arrangements are available and typically used for utility-scale renewables projects?

EETC is the typical offtaker for utility-scale renewable energy projects in Egypt. Given that its credit rating is not positive, lenders typically require a sovereign guarantee to be issued by the Egyptian Ministry of Finance to guarantee the payment obligations of EETC under the power purchase agreements it enters into as offtaker.

Procurement of offtaker agreements

How are long-term power purchase agreements procured by the offtakers in your jurisdiction? Are they the subject of feed-in tariffs, the subject of multi-project competitive tenders, or are they typically developed through the submission of unsolicited tenders?

Unsolicited tenders are currently not applicable in the renewable energy sector in Egypt. However, competitive bids are from time to time launched by NREA or EETC for the development of electricity generationprojects from renewable sources. There is also a FIT programme currently in place.

Operational authorisation

What government authorisations are required to operate a renewable energy project and sell electricity from renewable energy projects?

See question 24.


Are there legal requirements for the decommissioning of renewable energy projects? Must these requirements be funded by a sinking fund or through other credit enhancements during the operational phase of a renewable energy project?

The obligation to decommission renewable energy projects is contractual. The model power purchase agreements developed by EETC and typically used thereby in the projects where it acts as the offtaker, as well as usufruct agreements whereby NREA acts as lessor of land for renewable energy projects, contain decommissioning requirements.

Transaction structures

Construction financing

What are the primary structures for financing the construction of renewable energy projects in your jurisdiction?

The construction of renewables projects is typically undertaken as lump-sum turnkey projects, with the design and procurement largely carried out by highly specialised companies located outside Egypt, and the installation and civil works, in addition to limited scope procurement, by local contractors and subcontractors. Construction is largely financed by international finance institutions (IFIs) for private sector projects, or through grants from international donors for NREA projects. A very limited portion of the funding and part of the bonding is sourced from local commercial banks, given that most of the project components are sourced from outside Egypt in foreign currency, and local banks are legally required to lend in foreign currency only where the projects’ profits are generated in foreign currency (while most of the utility-scale projects in which EETC is the offtaker are paid in local currency, in the equivalent of the tariff priced in US dollars).

Operational financing

What are the primary structures for financing operating renewable energy projects in your jurisdiction?

Most utility-scale renewable energy projects in the country are funded mainly through non-recourse project finance and a smaller equity portion (in the range of 75:25 or 80:20). Loans are typically sourced from IFIs and development finance institutions, such as the International Finance Corporation, European Bank for Reconstruction and Development, European Investment Bank, Japan Bank for International Cooperation), Japan International Cooperation Agency or the African Development Bank for 12- to 18-year tenures. Where EETC is the offtaker, senior lenders now generally require a sovereign guarantee from the Egyptian Ministry of Finance or Central Bank of Egypt for the payments by the transmission company to the seller, as well as a seat of arbitration outside Egypt for the PPA.

Updates & Trends

Recent developments

Describe any market trends with respect to development, financing or operation in the renewables sector or other pertinent matters.Describe any notable pending or anticipated legislative proposals.

No updates at this time.