Scatec breaks ground on Egypt’s mega hybrid project

From the newsletter

Scatec ASA, a Norwegian renewable energy developer, has started building the 1,100 MW Obelisk solar and 100 MW battery project in Egypt. The project, set for phased completion by late 2026, will be North Africa's largest solar project with storage. Scatec will sell the electricity to the Egyptian  Electricity Transmission Company under a 25-year purchase agreement.

• Solar + battery storage projects are rapidly expanding across Africa this year. Renewables Rising has tracked over 20 such initiatives. These are crucial for stabilising grids with large-scale renewables integration.

• Egypt’s sovereign guarantee for the USD-denominated PPA reduces currency and offtaker risks, a critical move to reassure investors in volatile markets. This model could unlock similar projects in other African countries, where currency instability hinders renewables growth.

More details

• Construction will unfold in two distinct phases. The initial phase will see the development of 561 MW of solar capacity coupled with the 100 MW  battery energy storage system, with commercial operation slated for the first half of 2026. The subsequent phase will add a further 564 MW of solar generation capacity, expected to come online in the latter half of 2026. The total capital expenditure for the entire project is estimated at $590 million.

• Its financial structure includes $120 million in equity bridge loans, designed to defer Scatec's equity contributions until the construction phase nears completion. Furthermore, Scatec has secured a mandate letter with a consortium of development finance institutions (DFIs) for a significant portion, 80%, of the project's financing through long-term, non-recourse debt. This indicates strong confidence from international financial institutions in the project's viability and Egypt's energy sector.

• Egypt aims to add 12,000 MW of renewable capacity by 2026, with a strong emphasis on solar and wind projects such as the 1,800 MW Benban Solar Park, AMEA Power’s 2,000 MW solar-plus-storage expansion, and large-scale wind farms in the Gulf of Suez totalling several gigawatts. In 2025 alone, the government plans to connect 3,700 MW of solar capacity and 2,840 MWh of battery storage to the grid, backed by public investments and international partnerships to strengthen grid infrastructure and accommodate renewables.

• Obelisk will enhance grid reliability and flexibility, a critical factor as Egypt integrates more intermittent renewables. The project’s scale and hybrid design position Egypt as a leader in North Africa for solar-plus-storage technology, potentially catalysing similar projects regionally. It underscores Egypt’s commitment to transitioning from fossil fuels to a cleaner energy mix, supporting economic growth, emissions reduction, and energy export ambitions.

• The integration of a large-scale battery storage system with a solar farm of this magnitude shows the increasing maturity and economic viability of hybrid renewable energy projects in Africa. This synergy allows for better management of energy supply, particularly during peak demand periods or when solar irradiance is low.

• The Egyptian government's backing of the project through a sovereign guarantee underscores its commitment to attracting private investment in the renewable energy sector and achieving its national clean energy targets. This supportive policy environment is crucial for de-risking large-scale infrastructure projects. Other countries ought to adopt this trend to enable suitable investment environments for renewables across Africa.

Our take

• Egypt’s sovereign-backed PPA isn’t just risk mitigation, it’s a strategic necessity. In markets like Nigeria or Kenya, currency volatility has stalled gigawatt-scale solar projects for years. By guaranteeing USD-denominated tariffs, Egypt reassures investors that profits won’t evaporate in a devaluation spiral.

• The project's 100 MW battery is survival math. Egypt’s grid suffers 12% annual energy losses from outdated infrastructure; without storage, midday solar surges would overwhelm transformers. The project’s true innovation is storing cheap noon power for 7–9 PM peak demand, when Egyptian industries pay premium tariffs. This "time-shifted profitability" makes hybrids bankable, a model Kenya’s Malindi plant copied successfully in 2024.

• Lastly, sovereign guarantees are key for African renewables investment. Egypt's backing of the USD-denominated PPA with a sovereign guarantee significantly mitigates investor risk in a volatile market. This de-risking strategy, if replicated, could unlock substantial renewable energy investment across Africa, which often faces currency and offtaker uncertainties.