Excitement in the renewables industry has been focused on Egypt since the announcement of the 4,300MW feed-in tariff scheme in 2014. This is thanks to Egypt’s good wind and solar resources and the generous tariff on offer.

It will be mainly financed by development banks and international financial institutions.

But now private sector investors have realised that there are profits to be made in the renewables industry, and are keen to get involved.

A consortium including Saudi Arabia’s M. Sharbatly, who owns local Citystar Group, wants to provide equity for a massive 4GW worth of large-scale solar and wind projects. They have signed a memorandum of understanding with the Egyptian government.

The Egyptian Electricity & Renewable Energy Ministry estimates it needs around $70bn of investments in the power sector to build 54GW of new capacity. It hopes the private sector will finance around a third of this.

The willingness to invest in Egypt is also a sign of Saudi Arabia’s increasingly close relationship with Egypt and its commitment to supporting an economic recovery there.

But major challenges remain and the scheme is only in feasibility studies.

The largest practical problem will be grid capacity, an issue which has slowed the progress of much smaller projects in Jordan.

The New & Renewable Energy Authority (NREA) has had to limit participation in solar photovoltaic projects under the feed-in tariff to 2,000MW, despite receiving enough interest to develop double this amount. The limiting factor is grid capacity.

Egypt is investing heavily in improving and strengthening its grid, but absorbing more renewables capacity will be a huge challenge.

On the financial side, sovereign guarantees and mitigating currency risk will be key concerns that need to be addressed before power purchase agreements are signed.

If the projects go ahead as planned, it will mark the start of a fully commercially viable renewables market in Egypt and the region.