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.

Stay ahead on hydrogen with our free newsletter
Keep up with the latest developments in the international hydrogen industry with the free Accelerate Hydrogen newsletter. Sign up now for an unbiased, clear-sighted view of the fast-growing hydrogen sector.

The Hydrogen Council’s report, The Africa Hydrogen Opportunity, co-authored by consultancy McKinsey, argues that the process of developing renewables projects to service green hydrogen projects on the continent would have a “positive spill-over effect” on domestic power supply.

“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 paper comes just a few weeks after the UN and the International Renewable Energy Agency (Irena) published a joint report, warning that governments and businesses from the Global North are already alienating stakeholders in the Global South over green hydrogen exports projects.

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.

The Hydrogen Council’s report appears to be somewhat of a rebuke to this point of view, suggesting that in a scenario where African nations captured just 15% of global clean H2 trade volume, it could still produce around 6.5 million tonnes of green hydrogen for domestic use (predominantly in chemicals and synthetic aviation fuels) by 2050.

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.

But it also warned that developers face an uphill struggle getting cost-effective financing for green hydrogen projects in Africa, which in turn is putting up the costs of H2 production.

In fact, a rise in the weighted average cost of capital of just 6% results in a 50% increase in the levelised cost of hydrogen, the Hydrogen Council said, which is why H2 costs more to produce in Africa than in the Middle East, despite having better renewables resources.

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.

Germany has even set up its own subsidy scheme, H2Global, to help pay for the overseas production of green hydrogen that it would then import, with that programme being rolled out to the Netherlands and, potentially, the rest of the EU.

The EU has also pledged billions of euros to developing countries for green hydrogen export as part of its Global Gateway investment scheme.