October 2021: Why Hydrogen in Africa
There's a buzz for Hydrogen right now, what could that look like for Africa? This piece was written as a discussion piece, in close collaboration with Erik Rakhou.
The buzz over hydrogen is progressing phenomenally, as witnessed by global media1. Hydrogen is an abundant element and is an ideal renewable energy carrier. The basic concept that is now protruding the energy sector and wider policy discussions is that clean hydrogen2 can be a key part of the toolkit when considering the pathways to the energy transition. One could call it the battery of energy transition.
So what is all the buzz about, and how is this relevant to African economies?
Many, if not all, major industrial sectors across the world, including in Africa, use energy for heating, cooling, manufacturing, transportation, power generation and ammonia (fertilizer). Many of these sectors use energy sources like oil and natural gas that are heavy “emitters” that contribute to global Co2 emissions. Industries that produce 100% of everything we consume create Co2 emissions that the world still has little use for (albeit ‘use’ market of CO2 is growing). Unless the carbon generated is captured and, where possible, stored, as we see from debates on the way to Glasgow on carbon capture and carbon credit mechanisms.
An important option for decarbonising global economy, including African energy economies, is using clean hydrogen as an energy carrier; a Hydrogen economy can decarbonize industries, increase energy access, and reduce the amount of Co2 emitted into the atmosphere.
Why hydrogen for Africa?
Globally, the clean hydrogen market could potentially reach roughly €10 trillion in 2050, and a 2018 Goldman Sachs report estimates 13% of global GDP
So far, hydrogen has been most relevant to African industries in oil refining and fertiliser production. Hydrogen produces ammonia which is a vital ingredient for fertilizers production. What are the key issues to consider when expanding the horizon for the Hydrogen market from an African perspective? These are similar to any renewable energy development in Africa. Some issues can be quoted after speaking informally to local energy experts:
African countries drastically need electricity, around 70% of the sub-Saharan population has no access to electricity and, hence it would be difficult politically to produce hydrogen from, for instance, hydropower, unless there is a clear link to electrifying African citizens as well;
there is a need to access capital markets to invest in African countries;
and there is a need for political alignment and stability for investors to back renewable energy projects.
Despite the issues described above, the African energy market is growing whilst mostly being focused on hydrocarbons. This is not surprising as Africa has large reserves of hydrocarbons, including natural gas3. Hence, we see, e.g. large long-term contracts based on gas supply projects of global significance in Tanzania and Mozambique emerging4.
In addition, Africa has the natural capacity to produce hydrogen to match the increasing global demand to decarbonise industries, transportation, and electricity – most importantly, space to scale renewable energy supplies.
At present, only a few African countries are mentioned in global rankings of promising Power Purchase Agreement-developments5. However, the African green energy sector is expected to grow manifold. The Renewable energy initiative 2016 AREI plans to increase installed renewable capacity in Africa to 300 GW in 20306. The International Energy Agency (IEA) estimates Africa’s renewable energy capacity could reach 310GW by 20307. Hydrogen can offer a route to a global market that the demand for Renewable Energy provides. Moreover, some African countries may have a surplus of green energy, e.g. Congo (see further), which could be leveraged for the growing global hydrogen market.
The global North is ramping up to include clean hydrogen in its energy mix towards accelerated decarbonization. Countries like Japan are also in the market for green ammonia, an easily transportable derivative of hydrogen, expecting to import 3 million tons of clean ammonia by 20308. We anticipate that many more nations would introduce strategies for decarbonization in the race to net zero, including Africa, in a post-Glasgow COP world.
The world is the market; is Africa ready, though?
Many countries worldwide have developed hydrogen strategies; countries that have adopted hydrogen strategies have committed at least USD 37 billion; the private sector has announced an additional investment of USD 300 billion in hydrogen.9 In Africa, several countries and stakeholders are contemplating Hydrogen market opportunities. Some non-exhaustive examples described below show that hydrogen industry in Africa is cautiously ramping up to serve in some cases own, and most global markets:
South Africa: Active green hydrogen supply feasibility studies are led by SASOL10, and we see continued work on R&D of Hydrogen by Hydrogen South Africa (HySA) initiative. HySA is an initiative of the Department of Science and Technology of South Africa. Worth noting that South Africa is endowed with some 95% of the worldwide platinum11 group metals (PGMs). PGM catalysts are used to manufacture PEM electrolysers that produce hydrogen and in fuel cells, which form an important flexible source of green hydrogen (albeit Alkaline and SOE electrolysers are also making their way into the market)12. Hence, with current PEM electrolyser technologies, South Africa would have an advantage in the growing green hydrogen market.
Nigeria: Within the National Energy Policy 2018, Nigeria expressed interest in developing hydrogen to the energy mix. More recently, Seplat, a leading Nigerian energy firm, expressed to see more promise in natural gas and direct use of off-grid solar over hydrogen, citing complexity and cost as a reason not to consider investments in hydrogen13.
Ethiopia: Chinese GCL announced plans to convert natural gas to ammonia and eventually export liquid hydrogen from Ethiopia – it appears longer term the end-user market may be one of the steel mills in China (over 50% of global steel is made in China, and hydrogen can be readily used in steel making process)14.
Congo: The Democratic Republic of the Congo (DRC) is known to have the largest freshwater resources in Africa. The world’s largest dam is set to be built in DRC; this presents a grand opportunity for green hydrogen production in the region. In June 2021, Australian Fortescue Metals Group confirmed that energy generated from Grand Inga Dams could be a key ingredient for green hydrogen production using over 40 GW green energy potential and started exploring a business case including exports to European markets. The latter would even include constructing supporting ports infrastructure as well. The CEO of Fortescue, Dr Forrest, was quoted by media to say, “Fortescue’s green energy and green hydrogen projects in Africa were not confined to the DRC and included projects in Kenya and Ethiopia, with investors and financiers already indicating a willingness to commit more than $US100 billion.”.
Namibia: The government of Namibia reiterated the nations’ approaches to hydrogen as an emerging market with the introduction of the Green Hydrogen Council for national and economic growth. German stakeholders have recently committed $45.7million15 to the National Green Hydrogen Development of Namibia in 2021. Namibian government expresses the ambition to become a green hydrogen hub for Southern Africa, working together with neighbouring countries16.
Morocco: Morocco’s significant renewable energy potential forms an attractive investment ground for green hydrogen and renewable energy developers oriented to, i.e. European markets. For example, since June 2020, Germany and Morocco entered an agreement to develop green hydrogen under 2 themes - Power-to-X (generally referenced to the different ways of generating energy; power-to-heat, power-to-gas, power-to-chemicals) and Power-to-X research17. Interestingly, Morocco started considering using its green potential for use in producing hydrogen derivative, green ammonia locally (relevant to fertiliser production). This is a good example of African economies putting their own needs before exports18.
Egypt: Egypt, as a major economy of the continent, is actively looking into hydrogen potential. Recent examples involve Scatec investing in green hydrogen production for making ammonia, Siemens helping to develop Egypt’s hydrogen export potential, ENI exploring green and blue hydrogen production potential
So does Africa have the capacity to become a hydrogen market leader? Let’s unpack some of the issues.
Matters for contention?
For Green Hydrogen, electrolysis of water has to occur. This process uses a material amount of water (9 litres per kg of hydrogen). Countries like Ethiopia and Egypt are involved in pending water wars19, yet the Nile might also create opportunities for African nations to find water solutions that collectively benefit parties.
Also, any large scale production may affect the environmental situation – hence deliberate analysis, feasibility and Impact assessment per site will be needed.
So imagine hydrogen is produced, how will it be transported to the customers? The same way gas is/would have been through a pipeline. In fact, with some adjustments, most of the same infrastructure can distribute hydrogen, as studies in Europe show20. Once transported to shore, hydrogen can be shipped as ammonia or, e.g. as liquid hydrogen to other parts of the world. Using (converted) pipelines would require bilateral agreements between buying and selling nations to access trans-African transmission networks and ports. This is complex, but international support may be feasible.
And where is this technology coming from? The technologies (mostly scalable), generating plants, storage and transportation pipeline for hydrogen are ready and available with the support of international investors, and loosely so are investments where risks can be insured or otherwise warranted by large balance sheets; but is Africa politically ready?
Why does Africa need to produce hydrogen when they do not need it?
Africa’s opportunity to build a market for hydrocarbons that should have improved millions of Africans’ socio-economic growth was and is far from maximized. However, the Hydrogen economy presents a new opportunity for African leaders to strategically position their nations to play in a global low carbon future. More so, more renewable generation and (abated, e.g. for purposes of blue hydrogen) natural gas investment have a knock-on effect on the lifes of the 600 million Africans without access to electricity, providing cash flows for sustainable investments in a wider economy, including electrification. So, one could assert that Africa is ready to welcome hydrogen on the pathway to global decarbonisation as a way to provide cash flows for sustainable continent growth.
Would you agree that hydrogen market development in Africa is about to ramp up? Please share your thoughts
Connect with me here to stay updated on my hydrogen for Africa journey.
*Erik Rakhou is an international energy markets expert focused on European and global hydrogen markets development. Thank you Erik!
photo: Mining Magazine
Till next time,
Oghosa
Clean Hydrogen, the energy carrier, can be formed through various energy resources. Green and Blue hydrogen being the most prominent as clean hydrogen production methods at the moment. Pink Hydrogen, produced using nuclear energy and electrolysis, is also making rise as clean hydrogen. Green Hydrogen is hydrogen generated from renewable energy sources in electrolysis process of water. There is also Grey Hydrogen which is a process where Hydrogen is extracted from hydrocarbons using steam methane reforming; while Blue hydrogen is cleaner and generated from hydrocarbons the same way as Grey Hydrogen, with carbon being captured through carbon capture technology. More colours of hydrogen exist in professional discussions, yet the direction of travel to certify carbon footprint of making the hydrogen, not sticking to colours, as e.g. amount of carbon not captured in making blue hydrogen can differ.
https://www.ammoniaenergy.org/articles/japans-road-map-for-fuel-ammonia/
Excellent description of the green hydrogen market in Africa.
Just like how Africa powered many parts of the world with coal, oil and natural gas (carbon intensive fuels), we have the opportunity to radically decarbonise energy systems across the world.
In addition, these Hydrogen projects will provide incentives to fast development of renewable energy projects and greening of carbon heavy industries in Africa.