Green hydrogen from Africa: expensive dream or feasible solution?

Green hydrogen from Africa: expensive dream or feasible solution?

Europe plans to meet its green hydrogen needs through production in Africa. However, a comprehensive study by the Technical University of Munich (TUM) reveals that the costs of producing green hydrogen in Africa are significantly higher than previously assumed. Only two percent of around 10,000 locations examined in Africa could become competitive for export to Europe by 2030 if suitable conditions are met. These conditions include price and purchase guarantees from European countries, which must be considered a prerequisite for competitiveness. The details of this study are reported Sunny side.

The green hydrogen, which is produced through electrolysis using renewable energies, plays an important role in climate-friendly industrial production, for example in the steel industry. Africa is seen as a potential location for hydrogen production due to its special circumstances, particularly the favorable solar and wind conditions in coastal states. The first generation of projects is already being planned, but the majority are still in the conception phase.

High financing costs and risky models

The TUM study has identified inaccurate cost calculations in previous models for hydrogen production plants. A new calculation method takes into account specific framework conditions in 31 African countries, such as transport options, storage, legal certainty and political stability. Current market conditions suggest operators could pay up to 27 percent interest, whereas previous models assumed significantly lower rates of 4 to 8 percent.

The lowest possible price for hydrogen could be around five euros per kilogram if operators bear the risk alone. However, with guarantees from European countries, this price could fall to a good three euros per kilogram. In comparison, prices at an auction by the European Hydrogen Bank in 2024 were sometimes less than three euros per kilogram, which further questions Africa's competitiveness News Today.

Potential in various African countries

In total, around 200 locations in countries such as Algeria, Kenya, Mauritania, Morocco, Namibia and Sudan could become competitive, provided the necessary guarantees are in place. However, the study also shows that security risks were only considered at the national level, which could further reduce the number of potential sites. Political instruments such as credit default guarantees could provide crucial support to the trade in green hydrogen between Africa and Europe.

The need for stable agreements is emphasized to enable long-term industrial and development policies in Africa. Stephanie Hirmer, Professor of Climate Compatible Growth at the University of Oxford, warns that without effective policies, inefficient projects fail to realize Africa's potential and may also fail to benefit local populations.