How North Africa’s renewable energy regulations can boost FDI

June 2023 Al-Monitor PRO Trend Report 

3577 words

Introduction

In June 2023, Belgian engineering company Tractebel announced that it had started construction work on a major renewable energy project in Egypt. When finished, the Red Sea Wind Energy project, located in Egypt’s Gulf of Suez region, will be the largest single wind farm in terms of capacity in the Middle East and North Africa (MENA). The wind farm will power up to one million homes as Egypt works towards its plans to generate 42% of its electricity from renewable sources by 2035.

This is just one example of an increasing number of renewable projects that are taking shape in the North Africa region. The venture — which includes Belgian, Japanese, French and local Egyptian companies — also demonstrates the interest foreign investors and institutions are taking in North Africa’s renewable energy industry. Foreign direct investment (FDI) in renewables in the MENA region is likely to have reached record highs in 2022, with the Economist Intelligence Unit noting in a May report that “the outlook remains reasonably bright for further foreign investment in renewables.”

Part of the reason for North Africa’s success in achieving higher levels of FDI is that many of the region’s national governments have recognized the importance of establishing sound regulations to attract foreign investors, and over the years, the region has taken concrete steps to put in place a regulatory environment conducive to FDI within its renewable energy space.