Africa’s clean hydrogen path must begin with clearing the hype

Guest Author
The African continent in green with
Illustration by Nadya Nickels.

Africa has gained global attention as a prospective hub for hydrogen made with renewable energy. Ambitious models and optimistic leaders have fueled the notion that Africa, with its abundant solar and wind energy resources, has a special edge for low-cost, large-scale renewable hydrogen, resulting in upwards of 60 proposed projects across the continent.

Nearly all of the 95 million metric tons (Mt) of hydrogen consumed globally today is made from fossil fuels. However, a clean alternative that uses renewable power and an electrolyzer, a device that splits water into hydrogen and oxygen, is emerging. If produced at scale and low cost, renewable hydrogen can serve as a carbon-free energy alternative in heavy-industry and transportation sectors, where fossil fuel substitutes are hard to come by.

African countries have a lot to gain, and a lot to lose, from investing heavily in the nascent clean hydrogen industry. Jumping in too deep and too early may lock countries with emerging economies into high-cost and high-risk investments, while waiting too long could cause them to miss the window to shape the market as it emerges.

Finding the right balancing act must begin with an open-eyed discourse free from the hype.

At the Energy for Growth Hub, my team and I have developed an African hydrogen projects tracker to evaluate the promise of these proposed projects against reality. Amidst the buzz, here are six facts that keep us grounded. (And I dive into more details here on our site.)

1. Africa’s hydrogen footprint today is small but dirty, much like the rest of the world. Africa annually consumes approximately 3 Mt of hydrogen in oil refining, steel and chemical production — accounting for less than 3% of global consumption. None of this hydrogen is from clean sources.

2. Renewable hydrogen is not new to Africa. Two, now decommissioned, fertilizer plants in Zimbabwe and Egypt once ranked amongst the top producers of renewable hydrogen, with a combined electrolyzer capacity of 265 megawatts (MW) powered by hydroelectricity. This historical level would have outpaced the United States’ current installed electrolyzer capacity by four-fold.

3. Proposed projects have unrealistic deployment scales and timelines. Since 2021, more than 60 projects have been announced across 16 countries, with Morocco, Egypt and South Africa leading the pack. The announced $160 billion in investment needed to actualize those projects by 2032 surpasses the gross domestic product of most African nations. Projects range from a few MW to 20 gigawatts (GW) in scale, while total global installed electrolyzer capacity is just 1.1 GW, mostly led by two projects in China, and there are currently no GW-scale hydrogen plants globally.

4. Projects require additional renewable energy sources, which face strong headwinds. It takes 40 to 190 kilowatt-hours (kWh) of renewable electricity to produce a single kilogram of hydrogen. Most proposed projects require large scale, new, dedicated wind and solar power supply. If just 5% (~5.4 GW) of the announced electrolyzers become operational, it could require more than 13 GW of renewables to be added to the continent, a scale comparable to all installed solar energy capacity in Africa.

Our recent assessment shows most renewable projects in Africa encounter a gauntlet of challenges, including high capital costs, rising inflation and limited financing mechanisms — obstacles likely to also confront renewable hydrogen projects.

Plus, with huge unmet energy needs, African countries must distinguish projects that divert resources away from the ones that serve as useful demand anchors to enable a high-energy continent.

5. Projects lack a buyer or are in very early stages. Nearly all proposed projects in Africa are conceptual, without binding offtake agreements and far from financial investment decisions (FID). Only one project in Egypt has made its first sale of clean hydrogen. While this trend is not unique to the continent, with only 4% of clean hydrogen projects reaching FID globally, it underscores deep market uncertainty.

6. The export intentions of many projects add costs and uncertainties. Hydrogen export and trade is a new phenomenon, as most hydrogen is currently produced and consumed onsite. Yet many proposed renewable hydrogen projects in Africa aim to export the gas or derivative products, like ammonia, primarily to Europe. Export from Africa, therefore, introduces added competition with more technologically-advanced and proximal nations, as well as with cheaper alternatives like clean hydrogen produced from natural gas with carbon capture technology. Uncertainties in demand and the need for additional transportation and delivery infrastructure further elevate production cost.

What’s more, the continent seeks to avoid the past pattern of exporting raw materials without building local industries. Yet, it’s deeply unclear if an African hydrogen industry optimized for exports will support local value add or industrialization.

Aligning an emerging clean hydrogen market with the continent’s energy and economic goals won’t be simple. A clear-eyed assessment is essential.