Indians develop dedicated green hydrogen grid in Egypt

From the newsletter

Sterlite Power, an Indian power transmission company, has proposed establishing an exclusive electricity grid for green hydrogen in Egypt. Estimated to cost up to $6 billion, the grid aims to enhance power transmission infrastructure, according to Minister of Investment and Foreign Trade Hassan El Khatib.

• A specialised electricity grid for green hydrogen could accelerate Egypt’s ability to scale its hydrogen production by eliminating bottlenecks in power transmission. 

• As competition for green hydrogen exports intensifies, securing reliable infrastructure could give Egypt a competitive advantage in supplying low-carbon fuels to global markets.

More details

• Established in 2008, Sterlite Power is a power transmission infrastructure developer and solutions provider operating at the intersection of the power and telecommunication sectors. It has a growing focus on renewable energy integration and electricity networks for emerging industries like green hydrogen.

• Egyptian Minister El Khatib announced the proposal for a dedicated electricity grid after meeting Tushar Chhabra, Sterlite Power’s Head of Business Acquisition, during his four-day visit to India. He also met Vikram Kapur of ReNew Power to discuss Egypt’s $8 billion hydrogen deal and OCIOR Energy CEO Ranjit Gupta, whose firm plans a $4.2 billion green ammonia project in SCZONE.

• Meanwhile, Air Liquide Egypt and United Energy Group (UEG) have signed an MoU to collaborate on sustainable energy projects. Their partnership focuses on producing low-carbon ammonia from renewable hydrogen, with Air Liquide aiming on leveraging its technological expertise to address energy intermittency challenges and ensure competitive ammonia production.

• Sterlite Power’s proposed electricity grid for green hydrogen represents a strategic milestone in Egypt’s renewable energy ambitions. A dedicated transmission network for hydrogen production would address one of the biggest challenges in hydrogen scaling: ensuring a reliable and efficient power supply for electrolysis. Green hydrogen production requires vast amounts of renewable electricity and by developing a specialized grid, Egypt can ensure stable energy availability for hydrogen plants, minimising fluctuations and supply risks.

• The grid would also be instrumental in helping the Nile nation edge closer to attaining its vision of capturing 8% of the global green hydrogen market as enshrined in its National Low-Carbon Hydrogen Strategy. The country’s ambition to become a top green hydrogen exporter is evident in its hydrogen agreements with Germany, Italy and the Netherlands, which are actively seeking alternative clean energy sources to support their decarbonisation goals.

• However, one of the biggest questions is whether Egypt can generate enough renewable energy to power its hydrogen ambitions. While the country has made impressive strides with solar and wind projects, its current 4.6 GW of installed renewable capacity falls drastically short of the 114 GW needed by 2040. However, the proposed dedicated grid could help bridge this gap by facilitating direct and efficient power transmission from renewable sources to hydrogen production sites, minimising energy losses and ensuring a stable supply. 

• Sterlite Power’s initiative is also expected to play a critical role in Egypt’s hydrogen export ambitions, particularly to Europe, where demand for low-carbon hydrogen is rising due to EU decarbonisation policies.

•  Egypt’s strategic location, existing port infrastructure and growing renewable energy capacity give it a competitive edge as a hydrogen supplier. The proposed grid could enable long-term power purchase agreements (PPAs) with hydrogen producers, ensuring cost-efficient and large-scale hydrogen production.

• Beyond exports, the project aligns with Egypt’s National Hydrogen Strategy, reinforcing the government’s commitment to integrating green hydrogen into its energy mix. The initiative also strengthens the Suez Canal Economic Zone (SCZONE), a key hub for hydrogen and ammonia projects, where companies like OCIOR Energy and ReNew Power are developing large-scale facilities. 

• However, several challenges must be addressed for the project to succeed. Grid integration is a key issue—will the dedicated hydrogen grid operate independently or be linked to Egypt’s national power network? The regulatory framework must also be clarified, particularly regarding electricity tariffs, grid access and hydrogen pricing mechanisms. Financing such a large-scale initiative will likely require blended financing models, incorporating private investment, development finance and government incentives to mitigate risk and attract capital. 

• Energy intermittency remains another hurdle, necessitating battery storage solutions or hybrid energy sources to stabilise power availability. Additionally, geopolitical risks, such as fluctuations in global hydrogen demand and evolving EU policies, could impact the project’s long-term viability.

Our take

• If successfully implemented, Sterlite Power’s project could cement Egypt’s position as a global hydrogen leader, strengthening its role as a clean energy hub and enhancing India-Egypt energy cooperation. However, regulatory clarity, financing and energy stability will determine its success.

• Despite announcing the highest number of green hydrogen projects in Africa, Egypt also faces the continent’s widest gap between commitments and execution. Delivering tangible results will be essential to maintaining investor confidence and solidifying its place in the global hydrogen economy.

• If Egypt manages to develop dedicated hydrogen infrastructure, it could set a benchmark for similar initiatives across the continent, shaping energy policy and attracting investment in emerging hydrogen markets.