Europe eyes Africa as ‘future source of cheap green hydrogen’

Published on : 2023-03-16

After Russia’s invasion of Ukraine in March 2022 set off a rush for gas resources worldwide, Europe picked Africa as an alternative supply market for natural gas, European energy ministers and other political leaders toured North African countries and gas initiatives in both East and West Africa received renewed support.

Now, Europe is setting its sight on Africa’s yet-to-be-developed green hydrogen industry, in what appears to be an early race to build up clean energy resources, part of a major, continued transition away from fossil fuels.

European Union and individual countries and companies have begun making massive commitments to green hydrogen and other forms of green energy in Africa, including provisions for exports from the continent to serve Europe’s domestic needs.

The recent signing of a US$34 billion dollar agreement for a giant green hydrogen project in Mauritania is just one of those developments.

On March 8, an international consortium made up of German project developer Conjuncta, the UAE renewable energy giant MASDAR, and Egyptian technology provider Infinity, signed a memorandum of understanding with the Mauritanian Ministry of Petroleum, Mines and Energy in a deal to produce up to 8 million tons of green hydrogen annually for the international market.

“It will have a strong link with Germany, both as a technology provider and as a potential supplier of green energy,” said Conjucta’s Chief Executive officer, Stefan Liebing, in a statement on the deal.

European Union Commission and European Investment banks have also signed strategic partnerships with Kenya and Morocco for multi-million dollar green hydrogen investments.

On March 1, European Investment Bank’s Vice President, Thomas Östros and Kenya’s National Treasury and Economic Planning Cabinet Secretary, Professor Njuguna Ndung’u, signed a Joint Declaration on Renewable Clean Hydrogen.

As part of the agreement, EIB is to initially mobilise grants worth EUR 1.8 million from the European Union and appraise possible loan financing for larger green hydrogen-related investments.

Kenya will help the bank’s energy and finance experts identify and develop new renewable energy projects and unlock the construction of hydrogen production infrastructure.

“The new agreement between the EIB, the EU Bank, and Kenya will accelerate identification and investment in green hydrogen in Kenya and harness renewable energy to deliver affordable and sustainable energy.” said European Union Ambassador to Kenya, Henriette Geiger.

In October 2022, EU Commission signed a pact with Morocco to invest millions in producing green hydrogen for export to Europe.

These and other looming partnerships are increasingly being documented in a number of reports, including that of the 2022 European Investment Bank, which African green hydrogen initiatives as a trillion-euro investment, highlighting the EU’s confidence in Africa’s green energy resources.

Dubbed “Africa’s Extraordinary Green Hydrogen Potential”, the report shows massive potential for green gas in Mauritania, Morocco, Southern Africa and Egypt.

All these areas, the authors of the report showed, already have roadmaps for technical, economic, environmental and financial solutions to unlock commercial development of green hydrogen.

The analysis projects the continent will reach an annual production capacity of 50 million tonnes of green hydrogen by 2035 at a competitive price of below $2 per kilogram.

In a comparative analysis done by research firm Aurora Energy, the production of clean hydrogen in Germany will cost between $4.23-5.43 per kilogram by 2030.

It singled out importing hydrogen to Germany from Morocco, transported by ship as liquid hydrogen, as presenting the most competitive option by 2030 – with a projected price of US$ 4.93 per kilogram.

Africa’s large potential capacity for green hydrogen production and the resultant competitive pricing has seen the continent referred to as the world’s new energy “powerhouse.”

However, the regional will need the requisite infrastructure to not only manufacture at scale but also transport the fuel underground through a pipeline or via tankers onto ships bound for Europe. Despite the variances in costs due to transport distance, overall costs remain significantly cheaper than the option of domestic production in Europe.

“Hydrogen is going to be a global commodity. Once the infrastructure is available, pipelines will unleash the cheapest hydrogen import routes to Europe. However, even imports of hydrogen by ship — more expensive than pipelines — will be economically competitive with domestic production,” explained Dilara Caglayan, a Senior Associate at Aurora Energy Research.

As Germany deepens its climate and energy partnership with Africa, Australia and Saudi Arabia, British firms are also showing a growing interest in Africa’s emerging green hydrogen sector.

Australian group Fortescue Metals has its eyes on Kenya, South Africa and, lately, Namibia through its local subsidiary, Fortescue Future Industries.

The Saudi energy firm Acwa Power plans a $10 billion investment in partnership with South Africa’s Industrial Development Corporation (IDC) while Hive Hydrogen, the subsidiary of the British company Hive Energy, is in talks with South Africa’s Eastern Cape officials to pump $6 billion into the Nelson Mandela Bay area for green ammonia production. Ammonia is often regarded as the easiest way to transport clean hydrogen, with the ammonia converted to hydrogen at the destination.

In May 2022, seven countries – Morocco, Mauritania, Egypt,  Kenya, Namibia, and South Africa – launched the African Green Hydrogen Alliance to help direct and coordinate African initiatives on green hydrogen.

Another multi-stakeholder partnership is also coming up in West Africa to research and promote the clean fuel in the region.

The ECOWAS centre for renewable energy and efficiency (ECREE) and the West Africa Sciences service centre on climate change and adapted land use (WASCAL) have lately been hosting bilateral meetings with government ministries, departments and non-governmental organisations for the development of green hydrogen initiatives.

ECREE is currently developing an ECOWAS green hydrogen initiative it expects will be implemented by partner members.

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