Africa stands at the precipice of a transformative opportunity in the global hydrogen market, according to a new report released by the Hydrogen Council.
The report, titled “The Africa Hydrogen Opportunity,” sheds light on the continent’s immense potential to meet 15% of globally traded hydrogen demand by leveraging its abundant renewable energy resources. However, while the prospects are promising, challenges related to project financing and risk mitigation pose significant hurdles to Africa’s hydrogen production build-out.
The report underscores Africa’s capacity to scale up renewable hydrogen production, projecting a growth trajectory from one million tonnes per annum (mtpa) in 2030 to 11 mtpa in 2050. This growth trajectory is expected to mobilize a cumulative investment of $400 billion, substantially enhancing Africa’s export value by $15 billion. With renewable energy potential as a cornerstone, Africa aims to carve out a substantial share in the global hydrogen market, aligning with its broader sustainability and economic development goals.
The report highlights a significant gap in Africa’s hydrogen project pipeline maturity compared to the global average. While announced and planned projects represent substantial investment potential, only a fraction has progressed beyond the conceptual stage. Close collaboration across project timelines, coupled with supportive government policies, is crucial to navigating these challenges and advancing project maturity. Governments can foster a conducive investment climate by providing regulatory clarity, engaging local communities, and facilitating infrastructure planning.
To mitigate project risks and attract investment, the report suggests leveraging instruments such as bridge loans and insurances offered by international development partners like the European Bank for Reconstruction and Development (EBRD) and the World Bank’s Multilateral Investment Guarantee Agency (MIGA). Moreover, partnerships with entities like H2Global can facilitate offtake agreements, further bolstering project viability and investor confidence.
Unlocking Africa’s hydrogen potential requires coordinated efforts across public and private sectors. Sanjiv Lamba, CEO of Linde and Hydrogen Council Co-Chair, emphasizes the importance of creating a supportive economic and legal framework to mitigate risks and attract investment. By fostering collaboration and implementing strategic interventions, Africa can position itself as a key player in the global hydrogen market while driving sustainable economic growth and energy transition initiatives.
