The rising hydrogen tide won’t lift all boats

Another week, another billion-dollar green hydrogen investment. South African solar developer Phelan Green Energy will pour $2.5 billion into H₂, the company announced on Monday.

• Production is expected to start in 2026, creating more than 250 jobs.

Why it matters: Multiplying African hydrogen projects tells us two things:

• Green investors see great opportunities on the continent.

• But only a few African countries will benefit.

The spike: Recent billion-dollar announcements (see table above) have stunned observers.

• Last week Egypt inked hydrogen investments worth $14.75 billion.

• That’s equivalent to the annual GDP of Mauritius or Rwanda.

The snag: Investment is pretty much limited to a few countries.

• Near Europe: Egypt and Morocco are the main sites.

• Near the Cape: South Africa and Namibia are catching up.

• A few more like Kenya are riding the coattails making fertiliser.

Green hydrogen, huh: Hydrogen is both an input in heavy industrial processes, ammonia production and a long-term store of energy.

• It can be either consumed in Africa or exported.

• It’s considered “green” when made with renewable electricity.

Good match: Africa is well suited to green hydrogen production thanks to:

• Lots of local solar, wind and geothermal power.

• Lower costs: Up to 75% cheaper than in Europe.

• Potential to leapfrog to clean industrial processes.

Investor stampede: Africa’s hydrogen potential is eulogised by McKinsey.

• The sector could be worth $1 trillion by 2035, creating 4.2 million jobs.

• It is projected to cut carbon emissions by 830 megatonnes annually.

• Hydrogen production might consume 24% of all energy in Africa by 2050.

Ok but: To participate in this bonanza, countries need a complex mix of ingredients.

1. Abundant clean energy sources

2. Transport and production infrastructure

3. Access to large-scale water resources

4. Supportive regulatory frameworks

5. Skilled labour pools, especially technical

6. Access to local or foreign market demand

Reality check: The conditions for large-scale green hydrogen production currently exist in few African countries.

• The industrialised north and south may be ready. The rest have homework to do.

• Nigeria struggles with fuel cartels that limit adoption of clean energy alternatives.

• Ethiopia has lots of clean energy but being landlocked lacks export & seawater access.

Complexity challenge: Even countries with all the necessary ingredients will struggle.

• Like a puzzle, having all the pieces is not enough. One has to fit them together too.

• Officials, industry & investors need to collaborate closely; that’s historically a challenge.

What’s next: Insiders say Europe wants to buy substantial quantities of African hydrogen.

• Richard Kiplagat, chair of the Africa Hydrogen Taskforce, says, “Over the next 24 months, the hydrogen landscape in Africa is set for transformation. We're moving from MOUs to finalised financial agreements, signifying substantial sector growth.”

• But he also says, “Hydrogen is the world's most abundant element and relatively straightforward to produce through electrolysis. However, the real challenge lies in optimising and scaling up production.”