Africa’s readiness to embrace green hydrogen was a key topic discussed in the recent Digital Energy Festival webinar, moderated by Cornelius Matthes, senior vice president of Dii Desert Energy, MENA.
The world is clearly embracing hydrogen as a clean energy source in order to decarbonise traditionally carbon-heavy sectors. The expert panel delved into whether Africa’s policy frameworks and existing infrastructure are sufficient to allow the continent to keep up with or even overtake their European counterparts.
Cornelius Matthes of Dii Desert Energy opened the session by stating that: “Green hydrogen is all over, and it will be interesting [to learn] where we stand in Africa”.
He explained that Africa and MENA are already successful players in renewables, so hydrogen is the next logical step. Matthes’ company, Dii Desert Energy, is currently working with key stakeholders to develop the market, based on the successful strategies being deployed in countries such as Spain, France and Germany.
In 2020, Dii launched the MENA Hydrogen Alliance to educate public and private stakeholders on opportunities within the market. Several European countries have launched ambitious hydrogen strategies and according to Matthes, these will play a crucial role in driving development in Africa.
The company has also been part of developing the North Africa – Europe Hydrogen Manifesto, and has contributed LCOE models to the European Green Deal’s 2x40GW Initiative. The European Union’s Frans Timmermans(Executive Vice-President for the Green Deal) fully supports the African hydrogen market and has included import and export models in their official EU strategy.
Catalysts driving the hydrogen uptake
Andrea Lovato, vice president, head of renewable & green hydrogen at
ACWA Power, emphasised the two main catalysts driving hydrogen uptake in Africa. Firstly, green hydrogen will effectively support a clean global economy, decreasing the carbon footprint across many sectors.
Secondly, producing green hydrogen is becoming increasingly cost-competitive, as the cost of producing renewable energy is becoming cheaper. “Electrolyser economics is becoming more feasible,” says Lovato.
Lovato referred specifically to the NEOM and ACWA Power project, as a model project in Saudi Arabia with global relevance.
The $5 billion green hydrogen facility will be built in the ‘smart city’ Neom. The project will use 4GW of renewable power from solar, wind and storage to produce 650 tons of carbon-free hydrogen per day using Halidor Topsoe’s ammonia technology. Lovato states that the hydrogen will be converted into 3,500 tonnes of green ammonia per day, creating a green ammonia loop that will feed Africa and the world’s green fertilizer requirements.
The discussion moved from the Middle East to Morocco, a country viewed as having major potential for hydrogen. The country is a pioneer in renewable energy and imports 2 million tonnes of ammonia per year.
Tarik Hamane, Executive Director and Head of Development Masen (Moroccan Agency for Sustainable Energy) explained that in 2009, Morocco set out a clearly defined renewables target of 42% by 2020. This increased to 52% by 2030.
Says Hamane: “Morocco has enough solar and wind and evolution of technology to ensure competitive tariffs. [We have] the perfect location being close to Europe, we are well connected with ports with international standards and existing gas pipelines”. He adds that hydrogen is the natural next step for the country.
Hamane continued: “Green hydrogen is the real path to decarbonisation of the economy due to the fact that [hydrogen] transforms renewable energy into a commodity, you can store it, transport it and its free of carbon.”
Masen is currently looking to develop a hydrogen economy via a signed agreement with Germany. They are also working with the Netherlands to feed the local market, a big consumer of ammonia.
Funding hydrogen developments in Africa
Naturally, the discussion moved to the funding of the developments, which is always a noteworthy discussion topic when considering Africa’s investment landscape.
Saurabh Kaura, Climate Investment Specialist at the GREEN CLIMATE FUND, emphasised the need for the correct business model. Said Kaura: “The technology is well-proven, however, some commercial banks don’t want to fund the projects, as they are not bankable”.
He explained that factors such as questionable creditworthiness of the off-taker or non-conducive policy frameworks could also hinder financing. Currently, concessional capital is viewed through the lens of risk rather than pricing, which can be a hindrance for Africa. However, Kaura added that as projects grow in size and number, the commercial banks will come around.
Andrea Lovato added that there should be few challenges, even in Africa. “There is nothing really new in this market. The capacity is in place, the technology is in place and is bankable, especially in ammonia as a product, [there is] no risk. The electrolyser process is an old technology with a modular system. It’s well-proven technology. What has been the issue in terms of [achieving] scale, is the volume and cost of the electrolyser.”
The discussion concluded with the topic of whether Africa’s renewable capacity is sufficiently developed to support a green hydrogen market.
Andrea Lovato made it clear that green hydrogen requires green electricity and some countries in Africa lack green power. It is, therefore, necessary to first drive uptake of renewables with the support of clear policies. According to Lovato, it is not about the end product only, but the carbon footprint of the entire supply chain. There must be limits in place and those limits must be adhered to. Africa has a way to go in this regard, explained Lovato.
Saurabh Kaura countered Lovato by stating that: “Renewables and hydrogen should develop hand in hand rather than sequentially, this will boost electricity access and energy storage at the same time”.
To conclude, the panel agreed that in terms of available alternatives for Africa, financing for renewables projects can be slow. Hydrogen most certainly can be a part of the solution due to its scalability and the current gas infrastructure than easily accommodate this greener alternative.
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