Africa’s Green Hydrogen Projects Struggle to Reach Investment Decisions Amid Offtake Gaps
Africa’s ambition to become a major producer and exporter of green hydrogen is facing challenges as projects struggle to secure long-term offtake agreements, financing and supporting infrastructure.
The continent has strong potential because of its abundant solar and wind resources, but many proposed projects remain at the development stage, with relatively few reaching Final Investment Decision (FID).
Securing buyers willing to commit to long-term purchases remains one of the biggest challenges.
Many African projects are designed for export markets, making developers dependent on future demand and prices.
Without bankable offtake agreements, raising project finance becomes more difficult because lenders need confidence in future revenues.
Large-scale projects also require substantial investment in renewable power, electrolysers, storage, ports and transport infrastructure.
Development institutions are increasingly providing support to help projects overcome the gap between feasibility and commercial investment.
The African Development Bank’s Sustainable Energy Fund for Africa (SEFA), for example, supports green hydrogen projects through feasibility studies, engineering, transaction advisory services and assistance with supply and offtake agreements.
Infrastructure is another major consideration, with projects requiring reliable renewable power, water supplies, pipelines, ports and export facilities.
Despite these challenges, projects in Egypt, Morocco, Namibia and South Africa continue to progress.
Turning Africa’s large green hydrogen pipeline into commercial projects will ultimately depend on securing bankable offtake agreements, investment capital and coordinated infrastructure development.
If these barriers can be addressed, green hydrogen could become an important new export industry while supporting renewable energy development and industrialisation across the continent.