North Africa has been proposed as a potential hub for green hydrogen production, drawing on strong wind and solar resources, plenty of available land, and existing gas export pipelines to Europe.

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The EU, which targets ten million tonnes a year of imported renewable H2 by 2030, and several of its member states have been quick to court potential supply from North Africa with memoranda of understanding and offers of development finance and production subsidies (eg, via the German-led H2Global scheme).

On paper, the region has built up a pipeline of multiple gigawatt-scale projects, particularly in Egypt, Morocco and Mauritania, with Algeria also eyeing potential investment into export infrastructure.

However, amid uncertainty around demand, export routes, and incentives — whether offered by the host country’s government or importing nations — many of these projects remain at extremely early stages of development.

Egypt

During its time as the host of COP27 in November 2022, Egypt announced big plans for green hydrogen production, particularly within its Suez Canal Economic Zone.

This included the signing of eight “framework agreements” with developers Fortescue, TotalEnergies, Alfanar, EDF Renewables, Amea Power, Renew Power, and Masdar, with the last being granted a “golden licence” for development.

The EU had also signed a non-binding memorandum of understanding with Egypt at the climate summit, with an eye to co-operate on regulatory frameworks and support the buildout of production and infrastructure for H2 exports.

Since then, Egypt has also inked framework deals with ACWA Power, Energy China, and C2X, as well as a preliminary agreement with Ocior Energy, for green hydrogen and ammonia projects.

However, in the time since COP27, only one project — the 15MW Egypt Green pilot developed by Fertiglobe — has started operations, with little news on the remaining developers taking a positive final investment decision (FID) or starting construction.

Even Egypt Green has given no further update on its planned scale-up to 100MW, the FID for which had been scheduled for the end of 2023, nor revealed which company would supply the electrolysers, after its original supplier, Plug Power, was dropped in November 2022.

Part of the slow progress in Egypt may be due to the uncertainties surrounding offtake. In addition to direct exports to Europe, some of the announced projects explicitly intend to use H2 to make ammonia or methanol to supply ships transiting through the Suez Canal, one of the world’s busiest trade routes.

Europe’s FuelEU legislation, which would impact vessels that end up going through European waters, targets 1% of final energy consumption by 2031 to come from so-called Renewable Fuels of Non-Biological Origin (ie, green hydrogen and its derivatives), and a mandatory 2% by 2034 if the previous target is not met.

In the meantime, even shipping firms that have signed up to clean methanol offtake agreements, such as Maersk, seem to be leaning towards sourcing the fuel from biomethane in the short term.

Another element of uncertainty could be around the policy support for these projects.

At the end of January, Egypt’s government finally passed its suite of incentives for green hydrogen project developers, including a 33-55% tax credit as well as waivers on import and export fees — although this comes with a requirement that projects secure 70% of their cost from financiers outside the country.

German state-owned bank KfW’s €270m ($289.5m) Power-to-X development fund lists Egypt, as well as fellow North African country Morocco, among the locations for project developers to be eligible to apply for grants.

Morocco

Morocco’s hydrogen strategy, published in 2021, expects 4TWh (around 121,000 tonnes) of domestic H2 demand and an export market of 10TWh (around 303,000 tonnes) by 2030.

The EU had agreed at COP28 to provide €50m through its Green Partnership programme with Morocco to decarbonise the North African country’s economy, although not all of this will go towards hydrogen development.

Morocco is likely to benefit from anchor offtakers within its borders, particularly in the agrichemicals industry. State-owned OCP, one of the largest fertiliser companies in the world, plans to hedge against gas price volatility — which has a knock-on effect on ammonia prices — through developing its own renewable hydrogen feedstock.

OCP has already committed to spend $1.5bn from its balance sheet on a 200,000-tonnes-per-year green ammonia pilot plant at its existing facilities in Jorf Lasar, with operations scheduled to start in 2026, as well as $7bn on a larger one-million-tonne-a-year plant in Tarfaya for start-up in 2027.

When it comes to exports, Morocco has been touted as a potential supplier of cheap hydrogen to Europe, since it can not only leverage strong solar and wind resource in the south but is close enough to Spain that it can build a gaseous-hydrogen pipeline, generally considered a cheaper way to transport the molecule than shipping it via carriers or as a liquid.

However, some analysts have argued that the cost of producing H2 in Morocco would not be so much lower than making it in Spain that it would meaningfully offset the additional cost of building a pipeline.

Morocco has already proposed a massive 5,600km hydrogen pipeline linking 11 West African countries, including Mauritania, which would run in parallel to the planned $25bn Nigeria-Morocco natural-gas pipeline.

The gas pipeline, scheduled to begin construction this year, aims to replace molecules that had originally been supplied by Algeria, which cut off exports through Morocco via the Maghreb pipeline in 2021 and redirected supply to Spain and Portugal through its Medgaz pipeline.

A growing list of developers have already proposed gigawatt-scale projects.

TotalEnergies’ subsidiary Total Eren (now fully owned by the oil major) had bought 170,000 hectares of land in the Guelmim-Oued Noun administrative region from the Moroccan government for a 100-billion-dirham ($9.9bn) project drawing on 10GW of wind and solar energy.

The region would also site developer CWP Global’s proposed large-scale renewable ammonia facility, with 15GW of upstream wind and solar, in the southwestern city of Tan-Tan.

French developer HDF and Moroccan investment holding firm Falcon Capital Dakhla announced their plans to build a 8GW green hydrogen project in the country in November last year, while Abu Dhabi’s national energy company TAQA is reportedly considering $10bn of investment into a 6GW facility in the Dakhla-Oued Eddahab administrative region.

However, these projects are all still at an early stage of development, in part because Morocco’s “Hydrogen Offer”, a suite of incentives expected to cover land allocation and shared infrastructure, is yet to be published.

Algeria

The Algerian government has said it aims to supply 10% of Europe’s hydrogen demand by 2040, with plans under way for a subsea pipeline transporting H2 to Italy via neighbouring North African country Tunisia.

However, while hydrogen pipeline connections from Italy to Austria and Germany have been included in the European Commission’s proposed sixth list of Projects of Common Interest — which would allow for accelerated permitting and access to financial support — firm agreements on the subsea H2 link or repurposing gas pipelines between Algeria and Italy are yet to be signed.

At the end of last week, Germany agreed to provide €20m in funding towards a 50MW pilot project in the city of Arzew, as part of a wider commitment to build out infrastructure for large-scale production and export to Europe.

Mauritania

Mauritania, which has a GDP of around $10bn, has seen major promises from the EU when it comes to its potential green hydrogen and derivatives.

In October last year, the EU launched a Team Europe Initiative as part of its Global Gateway fund to back the development of renewable H2 projects and infrastructure in the North African country.

Last week, in addition to a €200m investment pledge from Spain, European Commission president Ursula von der Leyen suggested that Mauritania could produce green iron and steel — leveraging both its renewable hydrogen production potential and existing reserves of iron ore — for export to the EU, rather than transporting the molecules directly.

The country has, like Morocco, seen a number of large-scale projects proposed by international developers, although all remain at early stages.

These include Danish developer GreenGo Energy's 35GW moon-shaped Megaton Moon project; CWP Global’s 16-20GW Aman project (which will require 30GW of renewables); and two 10GW facilities — Project Nour, being developed by TotalEnergies and Chariot Energy, and the other by UAE-based renewables developer Masdar, which is set to cost $34bn.

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