Abstract Urban energy system modelling allows megacities to assess their future development and to draw sustainable pathways to meet the rapidly increasing energy needs. This paper elaborates three different scenarios for energy transition in Greater Cairo with particular emphasis on the impact of lowering the share of inhabitants living in informal settlements. A city-specific TIMES energy system model is used to investigate how energy supply and demand will evolve between 2015 and 2050. Besides, the impacts in final energy consumption and CO2 emissions are investigated considering different socio-economic pathways. The scenarios show that the long-term cost-efficiency optimization leads to the decarbonization of the power sector even in the absence of climate constraints. Climate policies are modeled to achieve by 2050 a carbon emissions reduction of 50% below the 2015 baseline. The results indicate that the implementation of current urban plans will double the carbon emissions per capita if no mitigation policies are adopted. The urban expansion programs need to take into consideration the energy-environment-economic nexus and to be coupled with climate mitigation policies to contain the rising carbon emissions.