Egypt just signed its largest data centre deal this week, joining Vodafone, 3D Electric and Cassava — all three targeting $1 billion at full build. The near-term commitment is 20MW. The whole country runs about 60MW today against a pipeline promising gigawatts. The constraint is not capital — it is power. Joining me is Doctor Islam Abdel Halim, IEEE Computer Society and Nile University. Welcome back to the show.
Thank you for hosting me. It is my pleasure to be with you.
People in the industry say the real obstacle to AI data centres is not capital, it is the grid. As an engineer, is that correct and what breaks first — generation, transmission, or the connection at the site?
I think the grid is one of the main challenges, but we need to separate three things: generation, transmission, and the final connection to the site. Egypt during the past years has built significant electricity generation capacity — also building the El Dabaa nuclear power plant, which will have a total capacity of 4,800MW. Today the first problem is still the connection at the site. The local transformers and transmission lines are fine, but the electricity should be available nationally, not necessarily at the required location, especially with the right voltage and timing. Smart grids, sensors, and AI can help Egypt predict demand and balance energy sources, detect faults, and support maintenance. Egypt has all the required capabilities to support this kind of project and make it successful.
Egypt has 14 data centres running about 60MW. The announced pipeline is orders of magnitude bigger. When you see an announced megawatt, what discount should apply?
We should not treat every announced megawatt as real, because an early announcement without secured land, financing approved by authorities, and committed customers — I would apply a discount of 80 or even 90%. The discount becomes smaller when the project has secured land, confirmed power connection, available financing, and committed customers. We should only value megawatts that are financed, connected, and used by paying customers. That is what is most important.
3D Electric is listed on the EGX and is in this venture and in a separate $2.1 billion joint venture with Gulf Data Hub, while also manufacturing the grid and power management equipment the whole sector needs. Is that a hedge where it earns either way, or a concentration risk?
It is both — an opportunity and a consideration. It is an opportunity because 3D Electric can benefit at several levels. It can invest in data centres, provide cables, transformers, and power management systems, and has the knowhow. Even if another company develops a data centre, 3D may still benefit by supplying the electricity infrastructure. However, this activity still depends on the same main assumption — that Egypt's data centre market will grow and that announced projects become operational. Investors should be able to understand the context and any possible conflicts of interest. Cybersecurity is also an important issue — energy management systems are digitally connected, which raises security concerns. These must be designed as secure critical infrastructure.
If a project needs a new grid connection or dedicated generation, who actually pays and does it show up in the returns?
At the end of the day, the project pays for itself — either directly or indirectly. The developer may pay for transmission lines, transformers, batteries, or backup generation. In other cases, the electricity company or government may build part of the infrastructure, but the cost should be returned through connection fees, electricity prices, or long-term payments — and it will therefore appear in the project financial returns. Timing is also important. A complete data centre may remain unused if a grid connection is delayed. During that time the investor continues paying interest, maintenance, and other costs without receiving income. The agreement must clearly say who will build the connection, who will pay, and when electricity becomes available.
Thank you very much for joining us today.
Thank you so much. It is my pleasure.
