Green hydrogen production in Africa 'can improve local power supply, but financing issues will drive up costs'
New Hydrogen Council report on exporting renewable H2 from African nations is something of a rebuke to a recent highly critical UN paper
The development of green hydrogen export projects in African countries could result in more renewable energy available for domestic electricity usage, industry trade body the Hydrogen Council has claimed in a new report this week.
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“Hydrogen production can act as a secure off-take of renewable energy, and it facilitates additional and larger scale [renewables] deployment,” says the report. “Local players can gain experience supplying the hydrogen production industry and later utilise their skills in energy production for domestic demand.”
Furthermore, the sheer size of the land mass available for power generation, coupled with the continent’s rich wind and solar resources means that green hydrogen-related renewables projects are only ever likely to take up a small portion of the total renewable energy potential.
“Consequently, building a hydrogen export project here would not have an adverse impact on domestic energy supply,” the report says.
The pair argued that the Global North needs to shift its focus from its own needs to those of developing countries, and that green hydrogen production in these nations should be prioritised for domestic use before exports.
In this scenario, African nations would export 11 million tonnes of green hydrogen by this date, up from one million tonnes in 2030, generating around $15bn in annual export revenues.
Uncertainties surrounding national economies, currencies or political systems are partly to blame for high financing costs, the Hydrogen Council report explained, along with project execution risks such as less experienced contractors and unreliable surrounding infrastructure.
To counter this, the Hydrogen Council and McKinsey suggest that producers, buyers and financiers make use of political risk insurance, as well as taking steps to secure hardware such as electrolysers and working together to develop shared infrastructure.
Many major economies have courted countries in the developing world to set up green hydrogen export projects, most typically for green ammonia, including Germany, the UK, the EU, Japan and South Korea.