Africa Watch: Green Hydrogen in Africa to Compete with Middle East Supply

Raising capital will be difficult for African producers

African countries have entered the green hydrogen supply production market with the announcement of the Africa Green Hydrogen Alliance last month with Europe being the likely destination. The main competition to supply European markets with green hydrogen for Africa will come from the Middle East. Where African producers will likely struggle is with attracting foreign capital necessary for the completion of the projects. Saudi Arabia, Oman, and the UAE will have large cash backing and more access to foreign capital.

African countries will turn to UN initiatives for support but will struggle to raise as much capital. However, African producers have the advantage in the supply of renewable sources of energy. Between geothermal, solar, and hydro, the vast majority of Kenya’s electricity production comes from renewable sources.

In Morocco, solar power is close to becoming the largest source of energy for the country. This places several African countries in advantageous positions in achieving large-scale green hydrogen. For countries on the west coast of Africa, exporting hydrogen to Europe will also be more cost-effective. Morocco’s proximity to Europe opens the possibility of pipeline export.

The highest likelihood of project completion will be in Morocco and Kenya because of their advancements in renewable energy. For Namibia and South Africa, local power grids are still struggling to deliver power to the population consistently. Investing heavily in building renewable energy capacity for green hydrogen production could be seen negatively while the domestic power sector is still weak. Egypt will have a more difficult road to achieving green hydrogen and will likely have more success in the blue hydrogen space due to its natural gas reserves and production. Mauritania’s likelihood of reaching competitive green hydrogen production is low.

While Africa will come into the green hydrogen space later than Middle East producers, Africa is expected to exceed Middle East production of green hydrogen by 2030. (For more on global green hydrogen production see ESAI Energy’s expanded Green Energy Trends where global green hydrogen projects are regularly updated.)

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