Africa could be a key green hydrogen supplier to Europe amid energy crisis, Rystad says

Egypt stands in the 'top position' in the production of the low-carbon fuel, with 21 projects in the pipeline, consultancy says

A green hydrogen plant in Puertollano, Spain. The EU launched the Green Deal Industrial Plan last month to boost the competitiveness of Europe's net-zero industry.  Bloomberg
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Africa could be a key supplier of green hydrogen to Europe, which is currently looking to diversify its energy mix following the reduction of Russian natural gas supplies, according to Rystad Energy.

More than 52 green hydrogen projects have been announced in Africa, with production set to reach 7.2 million tonnes by the end of 2035, the Norway-based consultancy said in a report on Wednesday.

Most of the planned projects will be producing ammonia as an end-product for export to Europe.

“The global green hydrogen economy is beginning to take shape, with Africa and Europe becoming a dynamo of production and use,” said Rajeev Pandey, clean tech analyst at Rystad Energy.

“Africa’s unparalleled mineral reserves are critical for electrolyser production and the region’s fantastic renewable potential combined with Europe’s prodigious production and import targets will not just alter energy flows, they will create them anew.”

Hydrogen is set to play a key role in the transition to a net-zero energy system and help to decarbonise sectors that are difficult to electrify such as heavy industry and long-haul transport.

Blue and grey hydrogen are produced from natural gas, while green hydrogen is produced using renewable energy.

Globally, the size of the hydrogen industry is expected to hit $183 billion this year, up from $129 billion in 2017, according to Fitch Solutions.

Africa's overall electrolyser pipeline currently stands at 114 gigawatts, out of which more than half is linked to countries located in Sub-Saharan Africa, according to Rystad.

Sub-Saharan Africa holds a “highly strategic” position as South Africa sits on about 90 per cent of the world’s global platinum group metals reserves, which are critical for the production of electrolysers used to extract green hydrogen, Rystad said.

Investment will be the main obstacle in building these large-scale projects and related infrastructure, the consultancy said.

Only 13 megawatts out of the planned 114 gigawatts has reached a final investment decision to date, it said.

However, European countries have been looking for partnerships in the continent, thanks to its abundant supply of land, low-cost workforce and renewable energy sources.

In December, RWE and Namibia's Hyphen Hydrogen Energy signed an initial agreement that could help the German utility source up to 300,000 tonnes of green ammonia per year from the African country.

Germany, Europe’s largest economy, aims to import up to 70 per cent of its hydrogen to feed its domestic demand by 2030, with much being sourced from Africa.

Last year, Norad, the Norwegian Agency for Development Co-operation, said it would provide about $9 million in funding to Scatec, an Oslo-based renewable energy company, to develop green hydrogen projects in Africa.

“These initial moves are set to accelerate as Europe struggles with an ongoing energy crisis and seeks new partners,” said Rystad.

Last month, the EU launched the Green Deal Industrial Plan to boost the “competitiveness” of Europe's net-zero industry and support the fast transition to climate neutrality.

The programme, which followed America's Inflation Reduction Act, seeks to promote renewable energy and green hydrogen projects across Africa, with an eye on signing agreements to expand global and regional investments, Rystad said.

Egypt, the Arab world's third-largest economy, stands in the "top position" in terms of green hydrogen-producing African countries, with 21 projects in the pipeline, the consultancy said.

Last year, Abu Dhabi's clean energy company Masdar and Hassan Allam Utilities signed two preliminary agreements to develop green hydrogen production plants in the Suez Canal Economic Zone and on the Mediterranean coast.

The project seeks to have electrolyser capacity of 4 gigawatts by 2030, and output of up to 480,000 tonnes of green hydrogen per year.

In November, Dubai-based AMEA Power signed a framework agreement with Egypt to develop a 1,000MW green hydrogen project for the production of green ammonia.

Meanwhile, a record 295 gigawatts of renewable energy capacity was added globally in 2022, up nearly 10 per cent from the previous year, according to the International Renewable Energy Agency (Irena).

Updated: March 24, 2023, 3:00 AM