International Solar Alliance releases Green Hydrogen Readiness Assessment for African Countries
The International Solar Alliance (ISA) has recently released a new publication, "Assessing the Readiness of African Countries for Green Hydrogen," which provides an in-depth analysis of four African countries. The report pointed out that these countries have very good prospects of becoming major green hydrogen hubs, a report developed with supporting funds from the Danish Embassy to the International Solar Alliance ISA, New Delhi, for the photovoltaic power generation hydrogen program.
The report shows that all candidate countries in Africa have considerable renewable resource potential required for green hydrogen production. ISA's joint research with Denmark shows that these countries are also taking measures to increase the proportion of renewable energy in their power structure.
Growing demand for green hydrogen
The report also points out that many countries have announced government-to-government cooperation (G2G) relationships with the EU and other countries to jointly develop green hydrogen ecosystems, covering project financing, construction, research and development, skills development, manufacturing and commodity procurement functions.
The report points out that countries with large mineral resources can use this opportunity to combine hydrogen energy with metal processing industries to produce green metals (such as green steel). Due to strict emission reduction policies such as the EU Carbon Border Adjustment Mechanism (CBAM), the demand for these green metals in the EU will continue to increase.
The study shows that, except Ethiopia, the other three countries have developed hydrogen strategies or roadmaps and set production targets. These countries have also established cooperation with international partners to promote research and development, product procurement, financing and skills development. For example, Morocco plans to strengthen its "priority partnership" with the European Union for the export of green hydrogen/ammonia, thereby partially ensuring commodity sales. All selected countries provide significant non-financial incentives to project developers to promote the development of green hydrogen projects.
In addition, land auctions in Egypt and Morocco are particularly important. These countries not only provide land near ports to promote the export of ammonia, but also commit to inject capital into the projects. In addition, they also provide shared infrastructure such as power transmission systems, hydrogen energy storage and transformers.
Impact on water resources
The study pointed out that all countries may face significant freshwater resource pressures. Therefore, green hydrogen production may require the use of seawater desalination facilities. This has a limited impact on the levelized cost of hydrogen (LCoH), about 1%-2%. However, the development of such projects needs to be focused on.
Egypt and Morocco have a strong industrial base that can effectively absorb domestically produced green hydrogen, thereby providing a market risk prevention mechanism. In addition, all countries can also develop core downstream industries domestically to help digest green hydrogen and produce value-added commodities such as green chemicals, fertilizers, steel, etc. These industries can help reduce the import burden while providing export opportunities.
The study also pointed out that large-scale electrolyzer manufacturing projects are crucial in reducing dependence on imports of green hydrogen equipment. Morocco and Namibia have announced such projects, which are expected to partially meet domestic demand for electrolyzers.
Financing African green hydrogen projects
As the green hydrogen sector is in its early stages of development and there are few commodity buyers, financing is challenging. However, countries can consider adopting innovative financial solutions and risk diversification mechanisms to promote the development of green hydrogen projects. A variety of financial instruments (such as tax credits, contracts for difference (CfD), viability gap funding (VGF) and demand aggregation) have been adopted globally, and Egypt and Morocco have provided some non-financial incentives such as land allocation, shared infrastructure construction and equity injections.
The study believes that green hydrogen production is best achieved using baseload or high capacity factor (CUF) renewable energy to achieve cost reduction. This can help reduce the size of the electrolyzer while increasing utilization. For example, the hybrid use of photovoltaic and onshore wind will help increase the availability of renewable energy. This will also need to be accompanied by sufficient transmission system strengthening/expansion to support the long-distance transmission of electricity to green hydrogen plants.
