Exploring the Opportunity for Green Hydrogen Production in Africa

Africa is a continent with abundant renewable energy resources, including solar and wind power. In recent years, there has been growing interest in harnessing these resources to produce green hydrogen, the clean and sustainable fuel that has significant potential to help drive the global energy transition. This article explores the prospects for the production of green hydrogen in Africa, examining the continent's unique advantages, the developing regulatory environment, potential challenges and how Ashurst is perfectly placed to help you develop a strategy around green hydrogen in Africa.

1.Abundant Renewable Energy Resources:

Africa boasts an exceptional capacity for renewable energy generation, particularly in the form of hydro, solar and wind power. The continent's geographical positioning grants it exceptional solar radiation levels (particular around the Sahara) and high and consistent wind speeds in various coastal regions.

Some statistics to support this view include:

• Solar Power: Africa receives an average of 2,000 kilowatt-hours of solar radiation per square meter per year, making it one of the sunniest regions globally (International Renewable Energy Agency (IRENA). (2020). Africa: A Renewable Energy Powerhouse). This abundant solar resource can be harnessed to generate electricity for green hydrogen production through solar photovoltaic (PV) systems.
• Wind Power: Africa possesses vast wind energy potential, with wind speeds averaging around 5 to 7 meters per second in various regions (World Wind Energy Association (WWEA). (2020). WWEA Small Wind World Report 2020). Harnessing wind power through the deployment of wind farms can provide a consistent and reliable source of electricity for electrolysis processes in green hydrogen production.
• Hydro Power: Africa is also rich in hydropower potential, with numerous rivers and water bodies across the continent. Hydropower can be utilized for electricity generation, help deal with the intermittency of other renewable sources by providing a reliable additional renewable energy source to power electrolysis facilities.

The abundance of these natural resources positions Africa as a potential global leader in green hydrogen production.

2.Climate Change Mitigation and Energy Transition:

The production and use of green hydrogen offer significant potential for mitigating climate change by reducing greenhouse gas emissions:

• Greenhouse Gas Emissions Reduction: Green hydrogen produced through renewable energy sources has the potential to significantly reduce greenhouse gas emissions compared to conventional fossil fuel-based hydrogen production. By transitioning to green hydrogen, Africa can contribute to global efforts in combating climate change and meeting the targets set under the Paris Agreement. According to the International Renewable Energy Agency (IRENA), scaling up renewable energy in Africa to meet the continent's electricity demand by 2030 could lead to a 27% reduction in carbon dioxide emissions compared to a business-as-usual scenario (International Renewable Energy Agency (IRENA). (2019). Africa 2030: Roadmap for a Renewable Energy Future).
• Sustainable Development Goals: The production of green hydrogen aligns with the United Nations Sustainable Development Goals (SDGs). The use of green hydrogen in various sectors, such as transportation, industry, and power generation, can support SDG 7 (Affordable and Clean Energy), SDG 9 (Industry, Innovation, and Infrastructure), and SDG 13 (Climate Action). Green hydrogen's potential to provide clean and reliable energy access to underserved communities also contributes to SDG 1 (No Poverty) and SDG 7 (Decent Work and Economic Growth).

Investing in green hydrogen production in Africa presents substantial economic opportunities. The development of green hydrogen infrastructure, including renewable energy installations and electrolysis plants, can stimulate local economies, attract foreign direct investment, and foster innovation and technological advancements. Moreover, the establishment of green hydrogen value chains can create job opportunities across various sectors, ranging from construction and manufacturing to research and development.

3.Local Energy Access and Regional Integration as benefits:

Access to reliable and affordable energy remains a challenge for many African countries. The development of green hydrogen infrastructure can help address this issue by expanding energy access and improving energy security. Green hydrogen can be utilized for electricity generation, powering vehicles, and even providing clean cooking solutions. Additionally, the integration of green hydrogen production and distribution infrastructure across regions can foster regional cooperation, trade, and energy resilience.

4. Regulation of Hydrogen Production:

As the production of green hydrogen gains momentum in Africa, regulatory frameworks play a crucial role in fostering a supportive environment for investment, ensuring safety standards, and promoting sustainable practices. Governments across the continent are recognizing the importance of developing robust regulatory frameworks specific to hydrogen production.

• Policy and Legal Frameworks: African countries are increasingly formulating policies and regulations that address various aspects of green hydrogen production. As an example Morocco has announced it three-level hydrogen strategy to promote the implementation of hydrogen and its derivatives which involves over the following periods: (i) 2020 – 2030: using Hydrogen as a raw material in industry, in particular for the production of green ammonia in the fertilizer industry and the export of products derived from green hydrogen to countries aiming to decarbonize their economy; (ii) 2030 – 2040: the reduction in the cost of green hydrogen products and the development of ammonia and hydrogen projects; and (iii) 2040 – 2050: local use of green hydrogen in industry, for heat production and in urban mobility and other types of public transport probably associated with green hydrogen used for freight, mining and public transport within the framework of the pilot projects. These frameworks encompass areas such as renewable energy targets, feed-in tariffs, carbon pricing mechanisms, incentives for investment, and the establishment of hydrogen value chains. By providing clear guidelines and incentives, governments can attract private sector investment and stimulate the growth of the green hydrogen sector.
• 安全与认证标准:安全连续ction, storage, and transportation of hydrogen are critical considerations. African countries are working towards establishing safety regulations and certification standards specific to hydrogen infrastructure, storage facilities, and transport networks. Collaborating with international organizations and adopting best practices can help ensure that hydrogen projects adhere to high safety standards, promoting confidence among investors and stakeholders.
• International Cooperation: Africa has the opportunity to collaborate with international partners to exchange knowledge, technical expertise, and best practices in hydrogen regulation. Engaging with global initiatives, such as the Hydrogen Council and the International Partnership for Hydrogen and Fuel Cells in the Economy, allows African countries to tap into a network of expertise and stay updated on the latest advancements in hydrogen regulation.
• Research and Development: Governments, academic institutions, and industry players in Africa should prioritize research and development efforts focused on hydrogen production, storage, and utilization. This includes exploring innovative technologies, improving efficiency, and addressing specific regional challenges. Encouraging collaboration between academia, industry, and research institutions can accelerate advancements in green hydrogen technologies and drive cost reductions.
• Public Awareness and Stakeholder Engagement: Building public awareness and fostering stakeholder engagement are essential for the successful implementation of green hydrogen projects. Governments, alongside industry stakeholders, should invest in public outreach initiatives to educate communities about the benefits of green hydrogen and address any concerns or misconceptions. Engaging local communities and incorporating their perspectives into decision-making processes will contribute to the social acceptance and sustainability of hydrogen projects.

Regulation plays a pivotal role in shaping the future of green hydrogen production in Africa. By developing comprehensive policy and legal frameworks, ensuring safety standards, fostering international cooperation, and investing in research and development, African countries can create an enabling environment for the growth of the green hydrogen sector. Effective regulation will attract investment, stimulate innovation, and ensure the sustainable and responsible development of this transformative industry. Collaboration among governments, international organizations, industry stakeholders, and local communities is key to establishing robust regulatory frameworks that unlock Africa's immense potential in green hydrogen production.

5.Potential Challenges and Considerations:

While the prospects for green hydrogen production in Africa are promising, several challenges must be addressed. These include financing requirements, technological expertise, infrastructure development, and policy frameworks. Consider the following challenges and statistics that shed light on the considerations for green hydrogen production in Africa:

• 融资需求:建立绿色hydrogen projects requires significant upfront investment, including the development of renewable energy installations, electrolysis plants, and associated infrastructure. According to BloombergNEF, green hydrogen costs are expected to decline by 85% by 2050, but initial investments remain substantial (BloombergNEF. (2021). Hydrogen Economy Outlook). Mobilizing finance, both domestic and international, to support the deployment of green hydrogen projects is a key challenge.
• Technological Expertise: Developing the necessary technological expertise and capacity for green hydrogen production is crucial. This includes expertise in renewable energy integration, electrolysis technology, hydrogen storage, and transportation. Collaborative efforts between academic institutions, research organizations, and industry players are needed to build a skilled workforce and promote knowledge exchange.
• Infrastructure Development: The development of infrastructure, such as renewable energy generation plants, electrolysers, hydrogen storage facilities, transportation and distribution networks, is essential for a robust green hydrogen value chain. The construction of this infrastructure requires careful planning, coordination, and investment. It is crucial to ensure that the infrastructure is designed to meet future demand while minimizing environmental impacts.
• 政策框架:建立supportive policy frameworks and regulatory environments is crucial for attracting investment and creating an enabling environment for green hydrogen production. Clear policies related to renewable energy targets, feed-in tariffs, carbon pricing mechanisms, and incentives for investment are necessary to drive the growth of the green hydrogen sector both for the production but also consumption of such hydrogen. Collaboration between governments, international organizations, and industry stakeholders is vital to develop effective policy frameworks.
• Social Acceptance and Stakeholder Engagement: The successful implementation of green hydrogen projects requires social acceptance and stakeholder engagement. Engaging with local communities, addressing concerns, and incorporating their perspectives into decision-making processes is essential for long-term sustainability and project success.

These challenges highlight the considerations that need to be addressed to unlock the full potential of green hydrogen production in Africa. Collaboration between governments, private sector entities, and international organizations is crucial to overcome these challenges and create an enabling environment for the successful deployment of green hydrogen projects.

6.How can Ashurst help you?

Africa possesses an exceptional opportunity to harness its vast renewable energy resources for the production of green hydrogen. With its abundant sunlight and strong winds, the continent has the potential to become a global leader in this burgeoning industry. Green hydrogen production in Africa can contribute significantly to climate change mitigation, energy access, economic growth, and regional integration. To seize these prospects, stakeholders must collaborate to address challenges and create favourable conditions for investment and technological advancement. By embracing green hydrogen, Africa can emerge as a sustainable energy hub, transforming its energy landscape and driving a greener future.

Ashurst has extensive experience and expertise in both renewable energy development and the development of oil and gas projects across the African continent and beyond. The former are essential for the development of green hydrogen and the latter (particularly around offtake, storage and transportation) involve similar issues to green hydrogen. This experience together with our experience of advising on some of the leading hydrogen projects across the globe (including in Africa such as on major hydrogen projects in Djibouti, Mauritania and Tunisia) means we are ideally placed to help structure, develop and finance such projects.

Authors:Yann Alix, Partner; Michael Burns, Partner; Mark Barges, Partner