How can Africa attract more green hydrogen investment?

African countries are in a race against time to establish themselves as renewables-driven hubs to supply escalating global demand for green hydrogen.

Green hydrogen production is becoming established as one of those new industries with a seemingly assured future in which African countries and their copious renewable energy resources are well positioned to play a significant role.

More than 50 projects have been proposed across the continent to supply an expected surge in global demand for green hydrogen and products that depend on it.

Leading the way in North Africa are Egypt, Morocco and Mauritania, all well located to serve European markets. In sub-Saharan Africa, South Africa can count on local demand, as well as looking to export markets, with countries such as Angola, Namibia, Kenya and Djibouti also seeking to put their green hydrogen plans in train.

It’s easy to understand the buzz around the industry and the interest development finance institutions (DFIs) are showing in supporting some projects.

Hydrogen is a feedstock suitable for everything from decarbonising energy-intensive industries such as steel and ammonia production to power generation, fuelling some forms of transport and for energy storage.

But climate change concerns mean that its future is limited if traditional production processes, which usually require natural gas and produce a lot of carbon emissions, are used. However, when produced using electrolysis powered by renewable energy, hydrogen becomes a low-emission green fuel across its life cycle.

Green hydrogen’s potential as a versatile, green feedstock has prompted forecasts of rapid growth for the industry. Global demand for green hydrogen could grow sevenfold to 607m tonnes by 2050, according to research published in November 2022 by the Africa Green Hydrogen Alliance (AGHA), led by a group of six African states with high production potential.

Competitive renewables

African countries think they have a shot at catering for a significant slice of the pie, because they have access to some of the world’s cheapest renewable energy, at a time when the cost of electrolysers is also falling. Given that around 60% of hydrogen production costs come from energy inputs, Africa has a competitive edge in that regard at least.

“Solar photovoltaic technology has provided us with the cheapest electricity. [Green hydrogen] will cost below €2 per kg in several African countries by 2030, much lower than the current mass assumption of €5 and a stark contrast to the $60-70 [€55-65] paid for an oil barrel,” said Ajay Mathur, director general of the International Solar Alliance (ISA) in a December 2022 report on the sector.

The report, commissioned by the European Investment Bank, the ISA and the African Union, is boldly titled Africa’s Extraordinary Green Hydrogen Potential. It suggests that the industry could bring €1 trillion of investment to Africa and that the continent could be producing 50m tonnes of green hydrogen a year by 2035.

Read full article at African Business

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