Success of Green Hydrogen Projects in Africa Hinges on Local Dynamics

Interest in green hydrogen and green ammonia production in Africa has skyrocketed since 2021. There are now at least 33 groups of companies across ten countries with green hydrogen and ammonia projects. Significant projects in Egypt, Mauritania, Morocco, Namibia, and South Africa have captured global attention.

Green hydrogen is a fuel source produced without carbon dioxide emissions. Green ammonia makes fertilizer and is beginning to see applications as a clean energy source. Because the processes for making the two gases are closely related, production occurs at the same site. Producing green hydrogen and ammonia requires electricity from renewable sources. As a result, green hydrogen and ammonia projects need renewable energy facilities (such as solar and wind farms).

Two factors are driving the increased demand for green hydrogen and ammonia. First, the war in Ukraine resulted in restrictions on hydrogen exports from Russia and disruptions to ammonia exports from Ukraine. As a result, countries, especially European countries, are trying to secure alternative supplies. Second, global funding for energy decarbonization efforts has enabled new projects by helping to cover the substantial initial infrastructure investment required. The availability of external financing has incentivized both companies and African governments to enter the industry. 

Most of the green hydrogen and ammonia projects are at an early stage of development. African governments are heavily involved in promoting green hydrogen and ammonia projects, including providing necessary access to capital and infrastructure. The early project status and the importance of governments make green hydrogen and ammonia investments especially sensitive to political, economic, and security issues.

Green hydrogen investors and producers need to understand how country-specific and regional developments might impact their projects to maximize their chances for success in this investment environment. Knowledge of the regulatory environment, levels of privatization in the energy sector, and potential land rights issues are critical because of their potential to disrupt projects. Companies must recognize key individuals and institutions to identify potential opportunities and challenges. Understanding the relationships between these key stakeholders will enable companies to anticipate and react to new developments.