Egypt launches largest green hydrogen plant by investment size

From the newsletter

A massive green hydrogen plant is set to be built in South Sinai, Eastern Egypt at a cost of $17 billion, marking Egypt’s largest project by investment. The facility will be completed in three phases by 2035, producing 0.4 million tonnes per annum (mtpa) of green hydrogen for export to Europe via the Suez Canal.

• The project is Egypt’s boldest move yet to lead Africa’s hydrogen economy, but the country has the continent’s widest gap between announced projects and real progress. Of the 15 projects announced, few have moved beyond early planning stages, raising questions about whether this ambitious plant can break the cycle of stalled developments.

• South Sinai’s proximity to the Suez Canal gives Egypt direct access to Europe’s energy markets. But location alone won’t secure dominance; Egypt will need competitive pricing, reliable infrastructure and investor-friendly policies to beat faster-moving rivals like Morocco and Namibia, which are racing to capture early demand.

More details

• The project is a partnership between the Investment Opportunities Platform of the General Authority for Investment and Free Zones and  the Ministry of Military Production.

• Occupying 127 square kilometers of land, the plant’s electrolysers will be powered by 3.1 GW of combined solar and hydro power. During the day, solar energy will run the electrolysers while simultaneously pumping water to a mountain-top reservoir. At night, the stored water will flow downhill, driving turbines to ensure continuous, round-the-clock operations.

• A project this size needs serious capital and long-term planning. While Egypt’s staged approach allows developers to refine processes and secure incremental investments, it delays the economic and geopolitical advantages of early market entry. With global hydrogen demand surging and European markets racing to secure suppliers, Egypt risks falling behind faster-moving competitors like Morocco, which is already securing early offtake deals. The longer Egypt delays scaling up production, the harder it may become to establish a strong foothold in the global market.

• The plant’s hybrid solar-hydro setup could help mitigate some of this risk, offering a technological edge through continuous 24/7 operations. Reliable, round-the-clock production would be a major draw for European buyers seeking a steady supply of green hydrogen. Yet, integrating and scaling this dual system at such a large capacity brings significant engineering complexity. Any delays or cost overruns in building and maintaining the infrastructure could ripple across the entire project timeline, potentially neutralising the strategic advantage of uninterrupted production.

• These technical challenges compound the project's financial stakes. The $17 billion price tag underscores the scale of Egypt’s ambition, but it also raises questions about the country’s ability to sustain investor confidence over a decade-long buildout. While multiple MOUs have been signed, turning those commitments into bankable contracts will require de-risking mechanisms like tax incentives, sovereign guarantees, or fixed-price power purchase agreements. Without these safeguards, the project risks stalling at the funding stage, a fate that has already befallen other hydrogen proposals across Africa.

• Beyond the financial hurdles, the project’s geopolitical potential adds another layer of complexity. Egypt already controls a critical choke point for global trade through the Suez Canal, and becoming a major green hydrogen exporter could further strengthen its influence in international energy markets. But this opportunity is fragile: credibility will depend on Egypt’s ability to deliver reliable, cost-competitive production. Any failure to meet supply commitments could erode buyer trust and diminish Egypt’s reputation as a serious player in the energy transition.

• To sustain long-term operations, Egypt will also need to invest in building a highly skilled workforce. A project of this scale requires specialised engineers, technicians and renewable energy experts to oversee complex systems and troubleshoot technical challenges. Without a pipeline of local talent, the country may be forced to rely heavily on foreign expertise, an expensive and potentially unsustainable solution. Launching training programs, strengthening research institutions and fostering international knowledge exchange will be crucial to developing the talent base needed for long-term success.

• Beyond technical and financial hurdles, addressing policy and regulatory bottlenecks will be essential to avoid repeating past mistakes. Slow permitting, land allocation issues and shifting policies have historically stalled renewable energy projects in Egypt. Proactively streamlining approvals, offering clear investment roadmaps and fostering public-private partnerships could help break the cycle of delays and help the Arab nation to turn its hydrogen ambitions into a lasting competitive advantage.

Our take

• Using solar power to pump water uphill for nighttime electricity is a smart way to solve the intermittency problem of renewables. If this system works at scale, it could serve as a blueprint for other hydrogen projects on the continent, showing how to maintain 24/7 operations without relying on fossil fuel backup.

• Egypt’s green hydrogen ambitions are well-documented but progress on the ground has been slow. Understanding and addressing the causes of previous delays will be crucial to ensuring the South Sinai project doesn’t suffer the same fate.

• If Egypt overcomes its challenges and makes this plant viable, it could set off a domino effect across Africa. Other countries might accelerate their projects to compete, leading to a continent-wide push for renewable energy dominance,  potentially turning Africa into the world’s green hydrogen powerhouse.