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Africa is a continent with significant competing needs. However, its wealth of resources, both underground and in the atmosphere, offers a solution to meet many of its existing challenges as well as contribute significantly to the energy needs of the rest of the world.
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As the world transitions away from fossil fuels and grapples with the urgent need to reduce carbon emissions towards a greener future to meet its ambitions of net zero, alternative energy resources, such as green hydrogen, are poised to revolutionise the energy landscape in Africa and beyond.
Africa, with its abundance of renewable energy potential and mineral resources, which are critical feedstocks for renewable energy industrial processes, stands at the forefront of this transformative journey.
The green hydrogen revolution
Green hydrogen is produced through a process known as electrolysis, where electricity generated from renewable sources, such as solar or wind, splits water into hydrogen and oxygen.
Africa, with its abundance of wind and solar resources as an input for renewable energy production, is uniquely positioned to harness green hydrogen as a beacon for sustainable development.
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The potential benefits of green hydrogen production in Africa extend far beyond environmental considerations.
- Diversify energy sources: Green hydrogen can complement existing energy sources and provide a reliable backup during energy shortages.
- Create jobs: The hydrogen industry offers substantial employment opportunities, from production and distribution to research and development.
- Facilitate energy export: Africa can become a net exporter of clean energy, strengthening economic ties with other countries, regions and continents.
- Drive technological advancement: As the hydrogen sector grows, it will stimulate innovation, creating a knowledge-based economy in Africa.
Some concerns
Various warning signals have been raised about the development of green hydrogen, most notably the cost of production and the inputs for production.
However, despite these criticisms, green hydrogen’s requirement of much-needed water in a continent experiencing growing cases of drought because of climate change, renewable energy resources are needed to ensure the energy in a continent that needs to meet its energy demands.
Consequently, alongside the growing investment by private developers into the production of green hydrogen, investment by the public sector through public and private sector partnerships needs to continue to address the availability of inputs into the production of green hydrogen, such as expanding the security of water and renewable infrastructure to de-risk the scarcity of these necessary inputs.
To this end, blended finance funding models structured to fill the gaps across the funding value chain will play a significant role in catalysing and market-making in this sector.
Development finance for early-stage growth to construction loans with a blend of financial instruments that allow for first loss, last paid, quasi-equity, mezzanine and senior debt, as well as the bond market, will play a key role in facilitating bankability and affordability of projects.
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Similarly, while the cost of development and purchasing resources may be contributing factors to the speed of uptake, this can be mitigated by focused investment in the circular economy that arises from its production and commoditisation.
One needs to weigh up the cost of not only seizing this vast potential both from an economic and growth perspective for emerging countries but also the world’s collective transitioning journey to the cost of investing resources, development and benefits to the circular economies.
The expanding landscape of hydrogen plants in Africa
For Africa to thrive in this new energy asset class, collaboration and partnerships will be required.
Several countries are in various stages of developing a green hydrogen market, some further along than others, depending on the extent of their available input resources. These include Lesotho, Mozambique, Namibia and South Africa with vast solar and wind energy.
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South Africa, with a dedicated renewable energy programme in place (the REIPP) since 2010, is leveraging off its success with the programme and is now implementing a developing battery storage programme to capture and store excess generation for future deployment to the national grid network, strengthening the case for green hydrogen production by providing excess renewable energy reserves.
In Northern Africa, where wind energy resources are substantial, several hydrogen projects are under way, tapping into the energy produced by wind farms to create green hydrogen.
Coastal regions in West Africa, with their proximity to the Atlantic Ocean, are exploring offshore wind energy to generate hydrogen, taking advantage of the region's geographical advantages.
The road ahead
To unlock the potential of green hydrogen in Africa, a multifaceted approach is required. This includes partnership of investment into renewable energy infrastructure, fostering research and development, establishing regulatory frameworks, and forming international collaborations to ensure the sustainable growth of the hydrogen sector.
In this journey toward sustainable development, the Development Bank of Southern Africa is committed to supporting projects and initiatives that harness the power of green hydrogen, propelling Africa into a cleaner, more prosperous future.
Together, we can unlock the full potential of green hydrogen and ensure a sustainable and thriving continent for generations to come.
*Koffman is the group executive for project preparation at the Development Bank of Southern Africa
