African countries captured 11% of the globally announced 163 GW of green hydrogen projects during the past year.
The projects represent more than half of the current pipeline of 243 GW announced since 2015 and the rate of new hydrogen projects being announced is not expected to slow down any time soon, says research and consulting multinational Wood Mackenzie hydrogen and emerging technologies research analyst Bridget van Dorsten.
For example, Mauritania and Namibia secured 15 GW of green hydrogen projects during the past year. The 10 GW solar, wind and hydrogen project in Mauritania will produce green hydrogen, and has the backing of UK firms, including transitional energy firm Chariot Energy Group.
In Namibia, Germany will invest $9.4-million in the Tsau//Khaeb National Park Hyphen Hydrogen project, which will produce 300 000 t/y of green hydrogen.
“Many African nations are developing relations via investments or memoranda of understanding with European countries surrounding hydrogen. These impressive project announcements made during the past year have been an indicator that there is room left to grow green hydrogen production in Africa.
“Africa has great potential for green hydrogen production because of its geographic advantage of renewable energy production, which is a major cost driver for green hydrogen,” she explains.
Thus far, all hydrogen projects announced in Africa have had a European investment partner, but this is not surprising given the lack of funding available for projects, she notes.
“But Africa does not lack potential. With some of the best sun and wind resources in the world, the region has incredible potential for green hydrogen production. However, Africa will likely require investment to make the projects reality, as production of renewable energy and, in turn, hydrogen have high upfront costs,” says Van Dorsten.
Only 1% of the 50-million tonnes a year of hydrogen production projects announcements made are currently in production and Wood Mackenzie estimates that only half of projects announced will reach completion.
“However, this would still be a huge pipeline and we expect announcements to keep getting more impressive and greater in quantity in coming years.”
Additionally, green hydrogen, or hydrogen produced via electrolysis powered by renewable energy, is responsible for more than 75% of the announced project pipeline. While Africa captured only 6% of the low-carbon projects globally, it captured 11% of the green hydrogen projects globally.
Further, trends show that countries with cheap renewable energy have significant advantages in terms of operating costs. Forecasts to 2050 by Wood Mackenzie indicate that the cheapest levelised cost for green hydrogen occurred in countries that were able to produce the cheapest renewable energy, says Van Dorsten.
Meanwhile, while the capital expenditure required for electrolysers is an important cost component to consider, the costs of renewable energy is a far larger component to the overall cost of hydrogen.
Wood Mackenzie expects the cost of electrolysers to decrease by at least 25% over the next five years, as it is a competitive market, and companies looking at adding green hydrogen to their operations within the next five years can be a good strategy, she says.
The mining and mobility sectors, including heavy-duty transport, aviation and marine fuels, are two of the most promising sectors in terms of demand for green hydrogen.
Another advantage is that hydrogen lends itself to being vertically integrated. For example, if a mine is producing hydrogen for fuel-cell battery haul vehicles, it can use hydrogen for other processes or to export it as an additional revenue stream.
Further, in the broader mining and minerals industry, using hydrogen produced using power from an existing plant can be used to produce green steel, which Wood Mackenzie sees as a potentially huge market.
Paradoxically, despite mining companies typically being significantly further ahead with decarbonisation goals and strategies than national policies or authorities in local areas currently mandate, as well as having demonstrated significant success in getting people and budget in place, the mining sector does not seem ready for green hydrogen.
“While there have been few mining-linked green hydrogen announcements and investments and while the mining sector must invest to generate green hydrogen, a barrier to adoption is mining machinery. Mining companies cannot invest in hydrogen-based hauling trucks if they are unable to buy them.”
The option to decarbonise via hydrogen in the mining sector is not limited to supply or costs, but rather by end-use. Miners must exert pressure on manufacturers to develop suitable mining equipment. This is an important pillar to establish to enable the mining industry to use hydrogen equipment, Van Dorsten notes.
Further, green hydrogen will, over the next ten years, see major cost reductions and Africa is well suited to produce cheap hydrogen and renewable energy. Hydrogen also provides more ways to integrate with various sectors and uses, because it is a competitive market, Van Dorsten states.