EGYPT – Global investor in sustainable infrastructure Actis has signed a memorandum of understanding (MoU) with the Egyptian government for green hydrogen development.

The MoU will give Actis an entry point into what could be one of the largest hydrogen markets in the region. Egypt has a comparative advantage due to its renewable resources and proximity to European and Asian markets.

“Today’s signing is a continuation of our commitment to Egypt where we have a 20 year track-record of investing over US$1 billion in some of the country’s businesses and project,” Sherif ElKholy, partner and head of Middle East and Africa for Infrastructure at Actis, said.

“The Egyptian government has ambitious energy transition plans, in addition to hosting COP27 this year, and active steps are being taken to make Egypt a major hub for green hydrogen.”

Currently, almost all of the world’s hydrogen is produced using fossil fuels, with a significant amount of CO2 emitted as a byproduct of the process.

Green hydrogen is far superior because it is generated by electrolysing water using renewable electricity and has zero emissions.

The production cost of green hydrogen depends on two factors: the cost of renewable power and the cost of the electrolysis equipment. It is currently more expensive than fossil fuel-based hydrogen production.

However, with an expected decrease in the cost of both renewable electricity and electrolysing equipment, countries such as Egypt are seizing the opportunity to lead the way.

“We expect green hydrogen to be a key enabler of the global energy transition. For industry and certain hard-to-abate sectors it offers an excellent and sustainable solution for decarbonisation,” Lisa Pinsley, partner and head of Middle East and Africa for Energy at Actis, added.

According to Actis, the development of green hydrogen is currently subject to some constraints. These include the cost of electricity produced from renewable sources and the cost of electrolysis equipment, which are currently higher than hydrogen production from fossil fuels.

However, the costs of producing renewable energy have been gradually falling for several years in Africa. And Egypt is now one of the continent’s leading clean energy producers, with a strategy based on solar and wind power.

Actis joins other investors who have signed agreements in recent months with the Egyptian authorities to produce hydrogen and its derivatives, including green ammonia.

For the time being, companies such as India’s ReNEW Power, Saudi Arabia’s Acwa Power, France’s Total Eren, Masdar of the United Arab Emirates, and France’s EDF Renewables will install their green hydrogen production units in the Suez Canal economic zone.

In recent years, Actis has invested in the country of the pharaohs through Lekela Power, the independent power producer (IPP) that operates the 252 MW West Bakr wind farm, but with its partner Mainstream Renewable Power, Actis has sold Lekela to Infinity Energy, a company based in Cairo, Egypt, and to Africa Finance Corporation (AFC), a pan-African multilateral development finance institution based in Lagos, Nigeria.

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