Four African countries primed for green hydrogen production
Egypt, Morocco, Namibia and Ethiopia have vast renewable energy potential which could enable them to contribute significantly towards developing a green hydrogen ecosystem.
A new International Solar Alliance (ISA) study – Readiness Assessment of Green Hydrogen in African Countries – is an in-depth analysis of the four African countries
That have strong developing trends and considerable potential to become major green hydrogen hubs.
“All candidate countries have significant renewable resource potential for green hydrogen production.
The ISA-Denmark Partnership study, said :
All the countries are also taking initiatives towards increasing the share of renewables in their electricity generation mix,
Demand for green hydrogen to increase
The ISA report said that many countries have announced government-to-government (G2G) partnerships between the EU and other nations for the development of green hydrogen ecosystems, covering functions such as partial project financing, project construction, research and development, skilling, manufacturing, commodity offtake, etc.
Countries with substantial mineral reserves can leverage this opportunity to integrate the hydrogen and metal processing sectors, producing ‘green metals’ like green steel.
“The demand for these green metals is expected to rise in the EU due to stringent emission reduction policies, such as the Carbon Border Adjustment Mechanism (CBAM).”
The study said that, apart from Ethiopia, the other three countries have formulated their hydrogen strategies or roadmaps along with production targets.
The countries also have international partnerships to promote research, product offtake, financing and skills development.
For example, Morocco aims to strengthen its ‘privileged partnership’ with the European Union (EU) for green hydrogen/green ammonia exports, thereby partially securing commodity offtake. All shortlisted countries are offering significant non-financial enablers to project developers to promote green hydrogen projects.
Also, the land auctions in Egypt and Morocco are significant, as these countries are not only providing land near ports to facilitate ammonia exports but have also committed to contributing equity to projects.
Additionally, they are providing shared infrastructure such as power evacuation systems, hydrogen storage, and transformers, among other facilities.
Impact on water supplies
The study points out that there may be significant freshwater stress in all the countries.
Green hydrogen production may therefore need the usage of seawater desalination facilities. This has a limited impact on the levelised cost of hydrogen or LCoH (about 1%–2%). However, there is a need for focus on developing such projects.
Egypt and Morocco have a strong industrial base that can potentially offtake a significant quantum of domestically produced green hydrogen, thereby providing market de-risking mechanism.
All the countries can however develop core downstream industries domestically to help offtake green hydrogen and produce value-added commodities, such as green chemicals, fertilisers, steel, etc. Such industries may help reduce the burden of imports as well as offer export opportunities.
The study says that large-scale electrolyser manufacturing projects play a crucial role in reducing import dependency for critical equipment needed in green hydrogen initiatives.
It notes that Morocco and Namibia have announced such projects, which are expected to partially meet the demand for electrolysers within these countries.
Bankrolling green hydrogen projects in Africa
Financing can be challenging for green hydrogen, due to the nascent nature of the sector and paucity of commodity offtakers at current price points.
However, the countries can consider innovative financial solutions and de-risking mechanisms to promote green hydrogen projects.
There are several important examples of various financial instruments—such as tax credits, Contracts for Difference (CfDs), Viability Gap Funding (VGFs) and demand aggregation—being adopted by some countries such as the US, Japan, and India.
“Egypt and Morocco have offered some non-financial enablers such as land allocation, shared infrastructure development, equity infusion, etc.”
The study says that it is preferable to use baseload or high-capacity utilisation factor (CUF) renewable energy for green hydrogen production.
This enables cost reduction due to downsizing of electrolysers and improvement in their utilisation.
For example, the hybridisation of PV (photovoltaic) and onshore wind, if possible, can help increase the availability of renewable energy.
This needs to be accompanied by sufficient transmission strengthening/expansion to enable long distance transmission of power to green hydrogen plants.
Sources like concentrated solar power (CSP), hydro, offshore wind and geothermal energy need to be studied in detail as almost all the countries have one or a combination of such high CUF renewable energy resources.
The report says,
The development of a green hydrogen ecosystem offers a significant opportunity for several African countries to grow their economies in a sustainable and ‘future-proof’ manner. Many of these nations possess substantial renewable energy potential including solar, wind, hydroelectric and geothermal resources,
Country snapshot
Namibia – Well positioned for developing renewable energy and hydrogen projects due to its favourable geographic location with abundant renewable resources and low population density. It has one of the highest solar irradiance in Africa, with an average GHI of 6.43 kWh/m2 (ranging between 5.88 and 6.71 kWh/m2) and an average DNI of 7.6kWh/m2 (ranging between 5.97 and 8.61kWh/m2). Namibia has an excellent potential for CSP projects with around 85.7% of its land area receiving a high DNI of 6.6kWh/m2 or more.
Morocco – Well positioned to enhance the integration of renewables and green hydrogen into its energy mix, creating new export revenue opportunities. Historically reliant on fossil fuels, Morocco is shifting its focus towards renewable energy. The country’s highest imports are fossil fuels like oil, coal and natural gas primarily used for electricity generation, transport and industrial applications.
Ethiopia – Well suited for green hydrogen production due to a nearly 100% penetration of renewable electricity. This extensive use of renewable energy provides a crucial foundation for green hydrogen production. Most of Ethiopia’s electricity is generated by hydropower (with an installed capacity of almost 4.8GW) which contributes 96.7% to the overall electricity generation of 17.3GWh. Wind energy (with an installed capacity of around 0.4GW) contributes around 3.1% to the electricity generation mix . Ethiopia also aims to position itself as an important electricity supplier to neighbouring countries, Djibouti, Sudan, Kenya and Tanzania.
Egypt – Actively implementing policy measures and fostering markets and partnerships to achieve its ambitious goals for renewables and green hydrogen. The New and Renewable Energy Authority (NREA) under the Egypt Ministry of Electricity, is strategically defining policy measures and implementation roadmap to execute the country’s renewable energy plan.
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Four African countries primed for green hydrogen production, source
