Algeria is emerging as a potential European green hydrogen supplier because of its combination of renewable energy resources, existing energy infrastructure and geographic proximity to Europe.
A new investment guide from Germany’s development agency GIZ identifies the country as a promising market for green hydrogen and Power to X development, while emphasizing that substantial infrastructure and market development will still be required before Algeria can reach its export ambitions.
Algeria adopted a national hydrogen strategy in 2023 and is targeting roughly 40 TWh of hydrogen production by 2040, equivalent to about 1.25 million tonnes of hydrogen annually. Much of the planned output is intended for export to Europe, potentially through the SoutH2 Corridor connecting North Africa with Italy, Austria and Germany.
Algeria’s main advantage is not simply its solar resource. Its location provides a potentially shorter supply route to European markets than projects dependent on maritime transport of hydrogen derivatives.
GIZ has highlighted Algeria’s proximity to Europe and existing energy infrastructure as important factors in the economics of future exports. The agency’s work in Algeria also focuses on developing renewable energy and hydrogen value chains, technology transfer and the investment framework required for larger projects.
The investment guide cited in recent Algerian reporting estimates that the most favorable renewable energy sites could support hydrogen production at approximately $2.50 to $3.00 per kilogram, while expanding development into less favorable locations could raise costs to around $3.50 to $4.00 per kilogram. These figures should be treated as potential modeled costs rather than established commercial prices.
That distinction is important because the economics of exported green hydrogen will ultimately depend on renewable electricity costs, electrolyzer utilization, transmission infrastructure, financing, water availability and the cost of transporting hydrogen or its derivatives into Europe.
Germany’s involvement extends beyond potential imports. Berlin has supported pilot projects intended to establish technical and commercial foundations for Algeria’s hydrogen industry.
The current development roadmap includes several 2 to 4 MW pilot electrolyzers and a 50 MW reference project by 2030, with KfW support. These projects are expected to test applications including e methanol, e kerosene and green ammonia.
A 50 MW reference plant would remain modest compared with the scale required to reach Algeria’s 2040 target, but its purpose is primarily to establish operating experience, supply chains, skills and industrial applications.
GIZ has also reported that some German companies are examining the possibility of manufacturing electrolyzers in Algeria, which could shift the relationship from hydrogen trade toward local industrial development and technology transfer.
SoutH2 Corridor Is Critical to the Export Case
The planned SoutH2 Corridor is central to Algeria’s European export strategy because pipeline transport could avoid some of the conversion and shipping requirements associated with exporting hydrogen over long maritime distances.
The proposed corridor would connect North Africa with Italy and onward to Central Europe, providing a potential route for Algerian hydrogen to reach German and other European markets. Germany and Algeria have already established bilateral cooperation around hydrogen development and the corridor.
However, pipeline infrastructure remains a prerequisite rather than a completed solution. Export projects will need coordinated investment in renewable generation, electrolysis, hydrogen compression, storage and transmission on both sides of the Mediterranean.
GIZ itself describes Algeria as having substantial renewable energy and hydrogen potential that is not yet fully exploited. Its current program focuses on strengthening the investment environment, technology transfer, skills and renewable energy deployment.
Algeria’s hydrogen framework is also still developing. Recent reporting on the GIZ investment guide notes that parts of the regulatory framework governing hydrogen production and transportation remain under development.
