The cleantech industry has a new partner – hydrogen and specifically green hydrogen. In hydrogen-related tech lies massive opportunities for the energy and sector coupling markets, as this clean-burning fuel, if implemented successfully, can help to keep carbon emissions in check and create jobs.
In 2020, the demand for hydrogen reached an estimated 87 million metric tons (MT). At the same time, the monetary value of hydrogen production sat at around $130 billion. And according to the IEA, demand is expected to grow to an impressive 500–680 million MT by 2050.
However, more than 95% of current hydrogen production is fossil-fuel based. Too little comes from clean sources, with around 6% of global natural gas and 2% of global coal going into hydrogen production.
When you hone in from a global view, Africa’s enormous renewable energy potential combined with hydrogen production presents the ideal business opportunity. But, be warned, don’t venture unthinkingly into this market without some insights.
Map your way into Africa’s hydrogen business terrain
The African continent has the potential to account for up to 10% of the global hydrogen production market by leveraging its solar, hydro, wind and biomass resources. Further, there are opportunities for the development of electrolysers and associated technologies. This is according to a Masdar report on Africa’s Green Energy Revolution: Hydrogen’s role in unlocking Africa’s untapped renewables .
Green hydrogen can play a critical role in aiding the decarbonisation of hard-to-abate industrial sectors, such as refinery and fertiliser industries. There is also an opportunity to deliver decarbonising of heavy industries, including iron and steel (we will address the topic of green steel in Issue 2-2023).
Other sectors are keenly awaiting green hydrogen developments to replace natural gas, generate clean electricity and transition transportation sectors ( marine is becoming very interesting, road, air and rail). Within these sectors, the EU plans to produce and import 20 million tons of renewable hydrogen annually by 2030, and many EU countries are looking to Africa to create those molecules.
There are pockets of activity already shaping Africa’s hydrogen profile. By unlocking up to $1.13 trillion in new investments in hydrogen projects through 2050, Africa could produce up to 60 million tons of green hydrogen capacity alone. Even more remarkable, Africa can produce it at a lower cost than other regions. This market advantage can effectively boost electrification and drive economic expansion, with up to $120 billion added to the continent’s GDP and up to 3.7 million jobs created.
Which African countries have hydrogen production?
In the last five years, global hydrogen production has moved from concept to implementation, with 217 green hydrogen projects reaching Final Investment Decision (FID). Although most FID projects are in Europe, several African countries are securing funding and setting up pilot projects.
In 2022 and the first half of 2023, several key project announcements by African energy producers are leading hydrogen development on the continent. These include Mauritania , with around four projects; Namibia, with over six; and Egypt, with ten under construction.
Helping the cause, the Africa Green Hydrogen Alliance, created by Egypt, Kenya, Mauritania, Morocco, Namibia and South Africa in May 2022, is addressing the need to collaborate on capacity building, financing, certification, and regulatory and policy spaces of green hydrogen development in Africa. But let’s be clear, the maturation and ultimate size of the African hydrogen industry will depend on how the energy transition plays out.
To explore this market and identify opportunities, look out for our upcoming Hydrogen Industry Insights to publish in August. When you download the teaser into the business opportunities inherent in the development of the hydrogen value chain, we will add you to the distribution list to be the first to receive the ESI Africa Hydrogen Industry Insights Volume.
Until next week.
Nicolette