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20 Sep 2022

Where to find the green hydrogen growth opportunities-Opinion Piece

Tags
Green Hydrogen
Author
ESI Africa
Green Hydrogen Opportunities

Green hydrogen may replace natural gas even faster than anticipated. Green hydrogen has been the buzzword for the past couple of years, not only in energy space, but also for other downstream industries. Given Russia’s recent invasion of Ukraine, the European Union plans to source an additional 10 million tons of green hydrogen this decade, in addition to the already previously stated targets, to offset the reduced demand of natural gas from the Russian Federation.

Africa’s potential to become a key green hydrogen hub is especially pronounced in countries with existing renewable energy policy and regulations, a skilled workforce, sound financial background, local demand market and established infrastructure that can be utilised for export of the sustainable resource. The continent is already home to a string of new green hydrogen projects that are in the planning phase. This includes plans for hydrogen production facilities in Egypt, Mauritania, Tunisia, Namibia, and South Africa’s cluster of projects in “hydrogen valley”, as well as ammonia production sites in Morocco and Kenya.

However, to maximise the green hydrogen opportunity, cooperation and alliance are key. By working together, countries can overcome major obstacles such as gaining access to technology and sufficient funding, sharing of skilled workforce, adapting and learning from successfully developed policies and regulations, diversifying local demand markets and surmounting political and security risks.

Green hydrogen has the potential to accelerate decarbonisation not only across the energy sector but is also a key milestone in the decarbonisation of the transport, industry, and heating sectors, while increasing the integration of renewable energy sources into the power system. However, green hydrogen can also considerably aid the continent through its applicability in decentralised grid systems. Minigrids, sometimes referred to as micro grids, are locally delineated and self-contained power grids that supply electricity to multiple homes or businesses.

These grid systems can be supplied by various fossil and renewable energy sources, such as solar PV or wind turbines, hydroelectric plants, or diesel generators. In so-called hybrid grid systems, these minigrids are powered by several types of power sources such as combining solar PV with natural gas, diesel or battery energy storage systems (BESS) as a back-up source to counterbalance seasonal or weather-related fluctuations, with one such form of BESS being hydrogen.

By electrolysis, surplus energy can be stored in the form of hydrogen and oxygen. Hydrogen can then be used for electricity generation when renewable supply is low. With minigrids offering the cheapest means of increasing the electrification rate on the African continent and increasingly cheaper renewable generation costs, development of hybrid minigrids powered by renewables and hydrogen presents a viable and important opportunity to African countries.

The hydrogen value chain begins with the extraction and manufacturing of metals required by fuel-cell catalysts. Africa is endowed with key rare earth metals required for hydrogen production and hydrogen fuel cells. South Africa has developed its National Hydrogen Strategy (NHS), which develops and guides innovation along the value chain of hydrogen and fuel cell technology, especially in platinum group metals, an area in which it is abundantly endowed. South Africa alone is home to 70% of the global platinum group metals (PGMs) and supplies over 85% of global Iridium.

A hydrogen supported and electrified economy could significantly aid the development of producing African nations. It could stimulate local value creation by creating new green jobs in local smaller communities, build new skilled workforce that is able to migrate through Africa freely and ultimately strengthen local economies. It is important that these African producing countries benefit from the full value chain by integrating manufacturing and pre-export value added activities such as fuel-cell manufacturing into the local value chain, apart from merely restricting these nations to the export of the raw material. To address this, African nations should pursue upstream and downstream hydrogen opportunities, as well as building targeted strategies with emphasis on capacity and skills development to ensure that local communities are qualified to be active along the entire value chain.

Africa isn’t the only region suitable to produce green hydrogen. Other regions such as South America, Australia and Southern Asia are well positioned to become key hydrogen players with an export focus. With favourable trade agreements in place, well established partnerships, large potential off-taker markets and growing skills development, the African continent is more than competitive but needs to take advantage of the opportunity sooner rather than later, especially given the EU’s search for alternative hydrogen supply within this decade.

This article is published originally on ESI Africa

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