A government decision, issued by the Electric Utility and Consumer Protection Regulatory Agency in Egypt, to stop the use of the net metering mechanism, also known as bidirectional meters (a mechanism that allows solar energy producers to exchange their surplus with the electricity grid and contributes to promoting decentralised renewable energy), has raised widespread criticism and concern in the solar energy production sector, for fear that the activity of about 168 companies qualified by the New and Renewable Energy Authority will stop, which would affect jobs and the green economy.
The decision, which was not issued in the form of a circular or published in the Official Gazette and is supposed to enter into force on 31 December this month, came without disclosure of the technical reasons that prompted the Ministry of Electricity to take it, and it has been described as contradicting the political will supporting the transition to clean energy, including Egypt Vision 2030 , the Integrated Sustainable Energy Strategy and Egypt’s National Climate Change Strategy 2050, since it leads to wasting the green energy produced by small and medium plants, deprives the national grid of clean energy, wastes millions of tonnes of fuel equivalent, and may hinder the achievement of the target of 42% renewable energy in the energy mix by 2030.
The decision is expected to raise the payback period for investments in solar energy projects from 5 years to more than 10 years, according to engineer Ayman Heiba, head of the Sustainable Energy Division at the Cairo Chamber of Commerce and president of the Sustainable Energy Development Association “SEDA”, which may cause these projects to lose their economic viability, hinder the expansion of renewable energy, double the burdens on factories, possibly harm export supply chains, and affect the competitiveness of Egyptian products in the event of non-compliance with carbon footprint standards.
For its part, the Arab Network for Environment and Development (RAED) expressed its deep concern over the decision to halt net metering, considering that it hinders national efforts to transition to clean energy, and called, in a statement it issued, for the decision to be reconsidered and for a dialogue to be opened with the Ministry of Electricity and the regulatory agency in order to correct the course and ensure the continuity of support, and to preserve the path of the transition to clean energy in Egypt.
Meanwhile, the Sustainable Energy Division at the Cairo Chamber of Commerce announced that it is preparing a detailed memorandum to submit to the head of the Cairo Chamber of Commerce to request an urgent meeting with the Ministry of Electricity, in order to discuss the repercussions of the Electric Utility Regulatory Agency’s decision to stop the net metering mechanism, which may negatively affect the investments of the companies qualified by the Renewable Energy Authority. It explained that small and medium solar energy projects are a key element in reducing fuel subsidies, narrowing the dollar gap and supporting the stability of the national grid, and that cancelling net metering will double the investment payback period and weaken the viability of projects, which may affect Egyptian exports in light of the Carbon Border Adjustment Mechanism (CBAM).
The division expressed its wish to hold a meeting with the Ministry of Electricity to discuss this file, explaining that the net metering mechanism is an important factor in maximising the use of the energy produced, especially given the difference between production times and factory operating periods, and expressing the hope that the decision would be re-examined and that solutions would be explored that guarantee continued benefit from the net metering mechanism, in a way that supports the competitiveness of Egyptian industry and contributes to strengthening efforts to transition to clean energy and attract green investment.
Engineer Hatem El-Roumy, first deputy head of the Sustainable Energy Division at the Cairo Chamber of Commerce, expects that the decision to stop bidirectional meters, or the “net metering” mechanism, will cause direct losses to about 168 companies working in the solar energy field in Egypt, as well as inflicting widespread damage on investors in the industrial and agricultural sectors, especially small and medium factories that have come to rely on solar energy as a basic option for continuing to operate.
El-Roumy explains, in statements to ”Zawia3”, that many small and medium factories had been relying on grid-connected solar plants under the “net metering” system, because of high electricity prices, to avoid closure or reduced production, and they will therefore be negatively affected by the decision, expressing surprise at the timing of its adoption amid the sharp fall in the prices of solar cells and system components, coinciding with the decline in the price of the dollar against the Egyptian pound to about 47 and a half pounds, and considering that these conditions represented a real opportunity to revive the solar energy sector and support the industrial and agricultural sectors, but the decision came to send a negative message that this path has stopped entirely.
He says: “Solar energy companies are already facing a state of paralysis, as the companies’ requests were no longer met with any response, before they were later informed that the system had been stopped permanently. This will deprive thousands of factories of the benefit of the large reduction in the cost of building solar plants, at a time when electricity prices are rising continuously”.
He explains that the cost of building solar plants has fallen by between 30% and 40%, which reduced the cost payback period from about eight years to just four years, and this was a strong incentive for factories to switch to solar energy, stressing that the decision will lead to the loss of this opportunity and may result in the closure, or a decline in the production, of thousands of factories.
He adds: “The damage is not limited to 168 companies only, but extends to between 2,000 and 3,000 factories that are now in urgent need of installing solar plants, and the potential losses in the industrial, agricultural and commercial sectors may far exceed the losses of the solar energy companies themselves.”
El-Roumy notes that the decision is not applied retroactively, explaining that the bidirectional meters already in place in homes and factories will continue to operate and cannot be touched, while the ban is limited to new applications, as any new applications for connection under the net metering system are currently being refused.
The member of the Sustainable Energy Division questions the point of restricting only about 300 megawatts of electricity produced by small and medium solar plants, while expanding central power plants with capacities of up to 3000 megawatts, stressing that small and medium projects connected to the net metering system are safer and more stable for the electricity grid, given their geographical distribution, compared with huge central plants concentrated at specific points, which may cause imbalances in the grid and technical problems such as electrical harmonics.
He explains that the net metering system is distinguished by its flexibility, as it allows solar energy to be connected at the consumption sites themselves, whether in factories or buildings, without the need for huge investments in transformer stations or in stepping voltage up and down, which reduces the burden on the grid, which already suffers from technical pressures, explaining that the installed capacity of electricity in Egypt reaches about 60 gigawatts, while peak consumption does not exceed 36 gigawatts. However, he stresses that this surplus does not justify stopping net metering, especially as the impact of small plants is less harmful than that of large plants.
He nevertheless acknowledges that the grid has effectively turned into a “battery” for solar plants, as the surplus is pumped in during the day and drawn at night, admitting the existence of technical effects that need regulation and study, but he stresses that the solution lies not in cancelling the mechanism but in setting clear scientific controls, such as obliging larger plants to install batteries to achieve balance, affirming that the solar energy file needs published scientific studies and serious research to protect the grid, and calling for transparency and reliance on scientific research instead of taking sudden decisions that would harm the national economy and the investment climate.
Installed solar energy capacity had reached about 2.59 gigawatts by the end of 2024, and total installed renewable energy capacity exceeded about 8.6 gigawatts at the end of the 2024/2025 fiscal year, including 3.034 gigawatts of wind energy, 2.8 gigawatts of solar energy and biomass, and approximately 2.8 gigawatts of hydroelectric power.
This represents a share of 33.4% of total renewable energy in Egypt, which plans to reach 8.5 gigawatts of solar energy by 2030, as part of a strategy to increase the share of renewable energy. The photovoltaic solar energy market is expected to grow from 2300 megawatts (2023) to more than 3500 megawatts by 2028.
Confusion in the energy and investment market
Dr Mohamed El-Sobky, professor of energy engineering and former head of the New and Renewable Energy Authority, explains that the “net metering” system remains in force until the 31st of this month, according to what the Electric Utility Regulatory Agency announced, but the announcement did not include clear reasons for the cancellation, pointing out that what has circulated about development has been limited to verbal statements, without a clear alternative or a developed mechanism being put forward to be applied before the existing system is stopped. He nevertheless condemns the announcement of the cancellation of an existing mechanism on the pretext of development without first completing this development or announcing the alternative, stressing that the body responsible for the net metering mechanism should have continued to operate the current system until its development was complete, or carried out the development without setting a date for cancellation before it was complete.
He affirms to ”Zawia3” that the net metering system brings several benefits to electricity distribution networks, most notably supplying electricity almost directly to load centres and consumption sites, which helps reduce electrical losses at the level of distribution networks, as well as its role in deferring the future investments needed to strengthen the networks of the distribution companies, indicating that the system has an important economic dimension, as a considerable number of companies depend on it, whether directly through companies that supply and install solar cells, or indirectly through the factories that produce the inputs of these projects, such as solar cell mounts, and therefore cancelling the system will negatively affect these entities, especially companies whose activity is limited to this field.
El-Sobky says: “Projects that have already applied the net metering system will not be affected, and their contracts will remain in force as contracted, while the impact of the decision will be confined to investors who are planning to implement future projects that rely on solar energy”, affirming his support for the demands of workers and developers in the renewable energy sector that a clear alternative be put forward before the net metering system is stopped.
The former head of the New and Renewable Energy Authority points out that the Electric Utility Regulatory Agency had announced the continuation of the net metering system until the required developments were proposed and discussed scientifically, technically and practically with the parties concerned, foremost among them the electricity distribution companies, developers, investors and end users wishing to install solar cells.
El-Sobky denies the existence of any current negative effects of net metering systems on voltage or grid stability, noting that Egypt is still far from any technical risks resulting from these systems, particularly as the discussion is confined to solar panels within limited ranges, and stressing that the opportunity still exists to remedy any potential negative consequences, if the file is handled through serious dialogue and genuine participation by all the parties concerned.
Dr Hafez El-Salmawy, professor of energy engineering at the Faculty of Engineering at Zagazig University and former chief executive of the Electric Utility and Consumer Protection Regulatory Agency, sees no objective justification for stopping the net metering mechanism, stressing that the basic aim of this mechanism is to increase solar energy production, which is a national goal, given that every kilowatt-hour generated from solar energy is matched by a reduction in gas imports from abroad and less pressure on hard currency.
He explains to ”Zawia3” that the projects to which the net metering system applies are basically small and medium projects, carried out by companies in the small and medium enterprise category, which the state declares that it supports and encourages, noting that these projects are distinguished by a high share of local components compared with large plants, as well as by the simplicity of their implementation and their low technical complexity.
He says: “These projects help ease the loads on electricity distribution networks, as the user relies partly on his own production and completes his needs from the grid, which reduces the pressure on it and makes it possible to serve larger numbers of consumers with the same existing investments, in addition to achieving clear environmental goals”.
He explains that the financing of net metering projects relies mostly on local financing, without the need for sovereign guarantees or burdensome government obligations, unlike large plants, which usually require government guarantees and impose burdens on the state’s credit position, and investors in these projects also do not demand payment or the transfer of profits in foreign currency.
The professor of energy engineering considers that the net metering mechanism applied in Egypt is one of the simplest and narrowest mechanisms in use worldwide, pointing out that the limited scope of its application is one of the reasons for the modest capacities implemented so far, and explaining that broadening the scope of the mechanisms followed globally would have accelerated the implementation of projects and increased the contribution of solar energy to the energy mix.
He points out that it would have been logical to announce the decision officially and publish it clearly, accompanied by declared reasons and justifications, to avoid the current state of ambiguity and confusion in the energy and investment market, stressing that issuing unpublished or unreasoned decisions contradicts the most basic rules of transparency, and that this affects not only the solar energy sector, but its negative impact extends to the investment climate in Egypt in general.
The agency’s former chief executive criticises what he described as a state of “severe fogginess” in managing the file, whether through unpublished decisions or through the multiplicity of circulars issued by the agency, explaining that there are about 18 circulars relating to the net metering mechanism, some of which contradict each other, which creates a state of confusion and uncertainty among investors.
He concludes his statements to us by stressing that the net metering file needs a comprehensive reconsideration based on a clear and declared vision, which defines the national goal to be achieved, the most appropriate means of reaching it, and the mechanisms for stimulating investment and mobilising savings, and emphasising that any serious discussion can only begin with a clear, official and reasoned decision.
The rising cost of building solar plants
In a related context, solar energy expert Wael El-Nashar, head of Onera Solar Energy, describes the Ministry of Electricity’s decision to stop the net metering mechanism (bidirectional meters) as “irrational”, considering that integrating electricity generated from multiple sources into the grid helps reduce the burden on the state of building new plants and enhances the efficiency of the system as a whole.
El-Nashar explains that the state itself is implementing large solar energy projects that feed their production into the national grid, and therefore allowing additional inputs from small producers would have supported the grid and reduced the need for new expansions. On the other hand, he points out that the national grid is still under development, and the decision may have been taken because of the limits of its current capacity to absorb simultaneous flows of electricity from tens of thousands of subscribers.
He tells ”Zawia3”: “Absorbing this pattern of decentralised generation requires turning the grid into a smart grid equipped with advanced information systems and artificial intelligence applications, enabling it to manage instantaneous electricity flows with high precision. Stopping the bidirectional system means keeping supply in one direction, so that the consumer obtains electricity from the grid without pumping his surplus into it.”
El-Nashar considers it likely that the decision is temporary until the development of the grid is completed, noting that the state’s plans up to 2030 include adding about 10,000 megawatts of renewable energy, which rules out any trend towards stopping expansion in this field, but reflects a desire for central control over the sources of supply.
The expert calls on small users of solar energy, particularly in homes and small facilities, to invest in energy storage systems, pointing out that battery prices have begun to become affordable, which allows daytime surpluses to be stored and used at times when there is no sun, now that the electricity company has stopped buying the surplus.
By contrast, engineer Mohamed Sheha, a technical expert in the field of solar energy, does not believe that cancelling bidirectional meters or the net metering mechanism will have a fundamental effect on solar energy companies so much as it will reflect negatively on the customers themselves, noting that companies usually design solar plants technically according to the customer’s actual consumption, and not for capacities greater than his needs, while the main effect of cancelling net metering will be the customer’s inability to benefit from any surplus electricity production.
He explains, in statements to ”Zawia3”, that the bidirectional meter gave the customer the advantage of benefiting from surplus electricity production, whether by storing it on the grid and using it at night instead of buying electricity from the grid, or by selling it to the government, which helps reduce the electricity bill and shorten the cost payback period, pointing out that the absence of this mechanism deprives the customer of this advantage without harming the company that implements the project.
Sheha points out that the alternative, using batteries to store energy, is an extremely costly solution, especially in the case of factories, explaining that the customer may need to almost double the capacity of the plant in order to charge the batteries, in addition to the fact that lithium batteries are expensive despite their lifespan of between 10 and 12 years.
He explains that storing energy of 100 kilowatt-hours over the course of the day may require dozens of batteries, each costing up to about EGP 150,000, which doubles the cost of the project compared with relying on the bidirectional meter, in addition to the need for an additional plant dedicated to charging the batteries.
He adds: “These costs make the battery system less economically viable compared with the net metering system, as the payback period for the cost of building a solar plant remains, on average, about five years, after which the customer obtains almost free electricity, given the long lifespan of solar panels, which may reach 30 years, with warranties extending to 25 years.”
He notes that periodic maintenance of the system remains limited in cost, as it is mostly confined to the inverters, stressing that the cost of maintaining or replacing them at long intervals cannot be compared with what the customer used to pay in conventional electricity bills, and explaining that the category that benefits most from bidirectional meters is factories, given their reliance on electricity by day and by night and their inability to use batteries because of their exorbitant cost, while residential units can, in some cases, rely on a limited number of batteries, although this also remains costly.
Sheha considers that the controversy over cancelling net metering stems mostly from the fears of customers who exploit the bidirectional meter system as an investment vehicle, by building solar plants on unused land and selling electricity to the government, and not from a direct impact on solar energy companies, considering that the decision, if applied, will have its main repercussions economically on the end user, not on the companies working in the sector.
A parliamentary move
Coinciding with the controversy and concerns raised by the decision, MP Mahmoud Essam Moussa, a member of the House of Representatives for the Reform and Development Party, submitted an urgent parliamentary question to Prime Minister Dr Mostafa Madbouly and the Minister of Electricity and Renewable Energy on 13 December this month, regarding the decision to cancel the “net metering” or “bidirectional meters” system issued by the head of the Electric Utility Regulatory Agency, warning that the decision represents an economic and social catastrophe that threatens the collapse of investor confidence and the waste of billions of pounds of national investment.
He explained in his question, a copy of which Zawia3 has seen, that dozens of owners of factories and industrial facilities received official notifications that the current system, which allows “net consumption” to be calculated between the energy produced by solar units and that consumed from the national grid, would be stopped, noting that this system helped factories reduce operating costs by up to 70%.
The MP explains, in exclusive statements to ”Zawia3”, that he contacted the head of the Electric Utility Regulatory Agency, Mohamed Moussa Omran, directly, who confirmed to him that the bidirectional meter system would stop as of 31 December, pointing out that this was done on the basis of an internal decision that has not yet been officially published on the agency’s website or through any other official body.
He says: “The head of the agency justified the decision on the grounds that the electricity produced from solar cells affects the frequency of the electricity grid, even though its share does not exceed 4% of the total grid”, describing this justification as illogical and stressing that he objected to this information and demanded a documented technical study justifying the decision, but the head of the agency did not provide any study supporting this argument.
The MP points out that the decision, according to what he was informed, is not temporary, as it was not stated that it is in force for a specific period until the grid is developed or modified, considering that the absence of any reference to a temporary nature confirms that the decision is permanent and not transitional.
Moussa notes that the decision will not be applied retroactively, as it will be limited to new applications submitted after 31 December, while applicants who had already obtained the necessary approvals before the decision was issued will be allowed to complete the procedures for installing the bidirectional meter.
Amid this escalating controversy, the decision to stop the net metering mechanism stands at a decisive crossroads between undeclared technical considerations and clear economic and environmental repercussions affecting a sector that is relied upon to support industry, reduce the energy bill and achieve the goals of the green transition.
Between parliamentary moves and repeated demands from experts and stakeholders to put forward studied and transparent alternatives, the future of decentralised solar energy in Egypt remains dependent on the decision-maker’s ability to manage the file through dialogue and science, not through sudden decisions: either a comprehensive review that restores the balance between protecting the grid and encouraging investment, or a double loss that affects the green economy and squanders opportunities that were capable of growth, at a time when the country needs every clean kilowatt.
