From green energy to green hydrogen: The role of Chinese investments in Egypt’s future energy landscape

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  • This report comprehensively analyzes the complexities, obstacles, and potential pathways for deploying green hydrogen projects in Egypt, with a focus on the involvement of Chinese companies across technology supply, construction, financing, and partnership development.
  • The research was conducted by Wei Shen and Han Chen, senior research fellows at IIGF, along with Dalia Ibrahiem, a Professor at Cairo University.
  • This report was commissioned by the African Climate Foundation (ACF).
  • It was produced independently by IIGF and the contents represent the views of IIGF and its researchers and not necessarily that of the ACF.

Below are several salient points extracted from the report:

  • Egypt’s advantageous wind and solar energy resources, coupled with strategic positioning, have attracted significant foreign investments over the past decade, fostering the development of renewable energy and green hydrogen capacities for its low-carbon energy transition and green industrial growth.
  • The Egyptian government has established a robust policy and institutional framework, including the National Green Hydrogen Strategy and the newly formed National Green Hydrogen Council, aiming to cultivate a leading global market for green energy and hydrogen.
  • Chinese companies, leveraging their extensive experience and networks in Egypt’s renewable energy sector, are prominent players in the emerging green hydrogen market, recognized for their efficient project delivery and technological expertise as major technology suppliers and EPC contractors.
  • China’s central government is poised to expand green investments in Africa, particularly in green hydrogen projects, in line with its ‘small and beautiful’ approach under the Green Belt and Road Initiative.
  • Green hydrogen investments entail intricate stages, spanning from renewable energy infrastructure development to hydrogen production and distribution networks, posing challenges for both host governments and investors, necessitating a more streamlined and supportive system from both sides.
  • Amid Egypt’s economic challenges exacerbated by the COVID-19 pandemic and geopolitical tensions, risk perceptions of Chinese financiers play a critical role in determining the bankability of prospective investments.
  • To boost Chinese companies’ participation in Egypt’s green hydrogen markets, innovative financial and policy support is essential, including the exploration of diverse financial instruments such as green bonds, carbon finance, and development finance to complement conventional project and EPC finance, addressing various components and stages of green hydrogen investments.
  • To enhance the development of innovative solutions, Chinese financial institutions should collaborate more closely with regional and international Multilateral Development Banks (MDBs) and commercial lenders, considering syndicated financing as a more effective and resilient option for risk sharing compared to the current practice of Chinese financiers acting as sole lenders.
  • Egypt should encourage domestic green hydrogen adoption while gradually reducing grey hydrogen capacity, balancing short-term revenue goals with long-term green industrial development through supportive policies, training programs, and educational initiatives to drive innovation domestically.

Download the full report HERE

Author: Bryan Groenendaal


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