$293 Billion on Paper, Millions Without Power: Africa’s Green Hydrogen Paradox

Africa is attracting billions of dollars in proposed green hydrogen investments, raising expectations that its abundant sunshine and wind could help decarbonize some of the world's most polluting industries. Still, behind the continent's ambitions lies a difficult economic question: should renewable electricity fuel an emerging export industry when hundreds of millions of Africans still lack reliable power?

A study titled "The Prospect and Future of Green Hydrogen in the Continent of Africa," published in the journal Sustainability, examines this dilemma. Authored by Firoz Alam, Yingai Jin, Xingjun Hu, Nawshad Haque, Masud Rana, Saifuddin Ahsan, Ivan Tolj and Quamrul Alam, the research evaluates hydrogen technologies, renewable resources, production economics and investment prospects across Africa.

The study identifies approximately $293 billion in announced green hydrogen investments across 16 African countries, but finds that most initiatives remain far from commercial realization. Its conclusions challenge the assumption that Africa's renewable-resource abundance alone can establish a competitive export industry, arguing instead for an energy transition built around domestic electrification, industrial development and realistic investment decisions.

Africa's hydrogen ambitions confront a fundamental energy divide

Green hydrogen offers a potentially important alternative to fossil-fuel-based hydrogen used in fertilizer production, refining and other industrial processes. Produced through water electrolysis powered by renewable electricity, it could also support the decarbonization of steelmaking and heavy transportation, where direct electrification presents considerable challenges.

Africa possesses extensive solar, wind, hydroelectric and geothermal resources. Its renewable potential has attracted interest from European and Gulf investors, particularly in countries including Egypt, Morocco, Mauritania, Namibia, Kenya and South Africa. These developments have encouraged ambitious proposals for large-scale hydrogen production and overseas supply.

However, the researchers emphasize a contradiction between Africa's export ambitions and its domestic electricity deficit. More than 640 million people lack reliable access to electricity, while annual per capita electricity consumption in much of Sub-Saharan Africa remains below 200 kilowatt-hours. Electricity shortages restrict manufacturing, healthcare, education and opportunities for economic advancement.

The continent generated approximately 965 terawatt-hours of electricity in 2024, according to estimates examined in the study, with fossil fuels accounting for roughly three-quarters of production. Despite substantial renewable resources, limited generation capacity, inadequate transmission networks and financing constraints continue to restrict access.

Large hydrogen facilities would require dedicated renewable generation, water supplies, electrolysers and transportation infrastructure. Developing these systems primarily for exports could create competition for investment and resources that might otherwise support domestic power expansion. The study therefore questions whether hydrogen exports should take precedence over universal electrification.

The researchers argue that electricity access provides a more immediate foundation for industrialization and socioeconomic development. Their assessment draws on existing evidence linking electrification with improved productivity, employment, household income, education and healthcare. Hydrogen development, they contend, should complement these priorities rather than displace them.

The $293 billion investment pipeline faces a commercial reality check

Africa's announced hydrogen investment pipeline appears substantial, but project maturity presents a different picture. The study identifies approximately $293 billion in proposed investments across 16 countries, including 11 initiatives classified as very early-stage, four as emerging and one as exploratory.

Most projects have not reached final investment decisions, indicating that announced investment volumes should not be confused with secured financing or operational capacity. The researchers identify uncertain international demand, high capital requirements, infrastructure deficiencies and evolving technology costs as major barriers to commercialization.

Production economics present another substantial obstacle. The study estimates that solar-powered green hydrogen in Africa would cost approximately $6–$10 per kilogram, depending on renewable-resource quality and operating conditions. Regions with exceptional solar irradiation offer lower theoretical production costs, but their advantages can diminish where water scarcity requires expensive supply infrastructure.

Wind-powered production exhibits even greater regional variation. Sites with high capacity factors can achieve substantially lower costs, while less productive locations face estimated costs reaching approximately $26 per kilogram. The findings demonstrate that renewable-resource availability must be assessed alongside actual electricity generation performance.

Electricity represents the dominant production expense, accounting for more than 64% of the levelized cost of hydrogen in the study's comparisons. Reducing renewable electricity prices and maximizing electrolyser operating hours are therefore particularly important for improving commercial competitiveness.

The researchers also examine technological readiness. Alkaline electrolysis is commercially mature, while proton exchange membrane systems offer greater operational flexibility under variable renewable supply. Emerging technologies promise additional efficiency improvements but face durability, material or commercialization challenges.

Even favorable production economics do not eliminate export costs. Hydrogen requires compression, storage, transportation or conversion into derivatives such as ammonia. The study's principal production-cost assessments exclude several downstream activities, meaning costs at the production facility cannot be equated with delivered prices in overseas markets.

Global hydrogen project delays and cancellations further complicate Africa's prospects. The review questions whether anticipated demand growth, rapid cost reductions and international investment commitments will materialize quickly enough to support ambitious production schedules.

Water scarcity, land rights and industrial priorities reshape the hydrogen opportunity

Africa's most promising hydrogen locations are not necessarily those receiving the greatest sunshine. The researchers assess renewable resources alongside water accessibility, infrastructure and geographical conditions, identifying coastal areas with strong wind and solar potential as comparatively favorable development locations.

The Gulf of Suez in Egypt, the Atlantic coastal region of Morocco and Mauritania, and Namibia's coastline emerge as promising areas where renewable resources can potentially be combined with seawater desalination. Inland regions face more complicated water-supply requirements, even where solar irradiation is exceptional.

Water availability consequently becomes a decisive economic and environmental consideration. The study's cost framework assumes approximately 12 litres of water per kilogram of hydrogen, while large projects require dependable treatment and distribution systems. Water-stressed locations could face substantial additional costs and competing demands.

Land requirements introduce another dimension. Solar parks, wind farms and associated hydrogen facilities occupy extensive areas, but the researchers reject the characterization of African landscapes as largely unused. Land may support grazing, seasonal cultivation, traditional livelihoods, cultural practices and ecological functions even without permanent industrial development.

Poorly designed projects could therefore create disputes over land access, water use and the distribution of economic benefits. The researchers argue that hydrogen development must recognize existing community interests rather than treating resource-rich territories primarily as potential export-production zones.

Domestic industrial demand offers an alternative development pathway. Hydrogen can support fertilizer manufacturing, steel production and other industrial activities, creating opportunities to develop local value chains rather than exporting energy resources with limited domestic processing.

This distinction is central to the study's development argument. Renewable electricity used to expand industrial production could support employment, technological capabilities and economic diversification, while hydrogen exports may generate narrower benefits unless linked to broader domestic economic objectives.

The researchers consequently recommend prioritizing universal electricity access and industrialization, followed by hydrogen applications where commercial feasibility and local development needs align. Their approach does not reject exports, but questions the economic logic of pursuing them ahead of essential domestic energy requirements.

Why Africa needs a hydrogen roadmap measured in decades, not years

Rather than encouraging immediate large-scale deployment, the study proposes a six-stage strategic roadmap extending from 2026 to 2060. The framework considers technology maturity, production costs, market demand, resource availability, infrastructure requirements and the timing of investment decisions.

The initial stage emphasizes observing international market developments between 2026 and 2028. Subsequent stages encompass national policy development, preparation of domestic markets, workforce capabilities, assessment of demand, infrastructure expansion and increasingly commercial hydrogen applications.

The researchers recommend advancing a small number of credible pilot projects toward final investment decisions while reconsidering unrealistic production targets. Such sequencing would allow governments and investors to test commercial conditions before committing substantial resources to large-scale infrastructure.

For policymakers, the findings support integrating hydrogen strategies with electricity-access programmes, renewable-energy expansion and industrial development plans. Investment decisions should account for domestic electricity needs, water availability, financial viability and the potential to generate local economic value.

Development finance institutions and investors face related challenges. High financing costs, currency risks, inadequate grids and uncertainty surrounding future buyers can undermine otherwise attractive projects. The researchers highlight the importance of realistic financing arrangements, regulatory frameworks, technical capacity and credible demand commitments.

The study also acknowledges limitations. Its assessments combine evidence from multiple sources and rely partly on long-term projections involving electricity prices, electrolyser performance, financing conditions and international demand. Its annualized cost methodology cannot fully capture hourly and seasonal fluctuations in renewable generation, while the proposed roadmap remains conditional on uncertain future developments.

The next challenge is determining which projects can deliver on their promises. Country-level assessments of financial feasibility, water availability, electricity-system demands, and industrial benefits, alongside closer examination of transport costs, buyer commitments, and community impacts, could reveal which initiatives have genuine commercial potential and which remain largely aspirational.

The broader policy relevance extends to SDG 7 on affordable and clean energy, SDG 8 on economic development, SDG 9 on industrialization and SDG 13 on climate action. The study presents these objectives as interconnected priorities requiring careful coordination rather than competing ambitions pursued independently.