Africa could capture as much as 10 per cent of the global green hydrogen market by 2050 as demand for cleaner fuel continues to grow amid decarbonisation efforts, a report has said.
African hydrogen projects could create up to 3.7 million jobs and add as much as $120 billion to the continent’s gross domestic product in the next three decades, Abu Dhabi's clean energy company Masdar and its Abu Dhabi Sustainability Week platform said in a report on Friday.
“Africa’s plentiful solar and wind resources could be leveraged to produce 30 to 60 million tonnes per annum (mtpa) of green hydrogen by 2050, about 5 per cent to 10 per cent of global demand,” the report said.
Hydrogen, which comes in various forms including green, blue and grey, is expected to play a key role in the coming years as economies and industries transition to a low-carbon world to mitigate the effects of climate change.
Globally, the size of the hydrogen industry is expected to hit $183bn by 2023, up from $129bn in 2017, according to Fitch Solutions.
French investment bank Natixis estimates that investment in hydrogen will exceed $300bn by 2030.
Blue and grey hydrogen are produced from natural gas, while green hydrogen is produced using renewable energy.
“Scaling up green hydrogen is an opportunity to not only build a robust global-export sector on the African continent but also to accelerate the deployment of renewable energy overall," Mohammad El Ramahi, Masdar's director of asset management and technical services, said.
“The grid-connected renewables used for green hydrogen production can feed energy into the grid to provide affordable clean energy to under-resourced areas — notably, in sub-Saharan Africa, which has an average electrification rate of only 48 per cent," he said.
In April, Masdar and Egypt’s Hassan Allam Utilities signed agreements with leading Egyptian state-backed entities to co-operate on the development of green hydrogen production plants in the country, targeting an electrolyser capacity of 4 gigawatts by 2030, and output of up to 480,000 tonnes of green hydrogen per year.
Masdar is also developing one of the world’s largest wind farms in Egypt with a capacity of 10 gigawatts. Dutch joint venture company Infinity Power and Hassan Allam Utilities are other partners in the project, Masdar said earlier this week.
The project will be part of Egypt’s Green Corridor initiative — a grid dedicated to renewable energy projects — and will contribute to Cairo's goal of ensuring renewable energy makes up 42 per cent of the country's energy mix by 2035.
Africa could be among the most competitive sources of green hydrogen in the world with a cost of $1.8 to $2.6 per kilogram in 2030, and further decreasing to about $1.2 to $1.6 per kg by 2050, as hydrogen production technology matures and renewable energy costs continue to decline, the report said.
Proximity to demand centres in Europe and Asia also “optimally positions” the continent to build an export-orientated hydrogen sector with exports estimated at 20 to 40 mtpa by 2050.
The remaining 10 to 20 mtpa would serve domestic hydrogen demand, helping to boost electrification of African communities.
In total, $680bn to $1.13 trillion of investment would have to flow into the region by 2050 to reach the production capacity with the largest share of the investments estimated at $320bn to $610bn for renewables to produce the hydrogen, followed by electrolysis plants.
Most of the required capital is expected to come from foreign investors, Masdar said.