As global demand for green hydrogen grows more slowly than expected, African governments and developers are urged to move away from large-scale projects and focus instead on smaller, phased plants that require less costly infrastructure and can secure buyers more easily.

Nearly all announced green hydrogen production projects in Africa have yet to reach the critical final investment decision (FID) stage, according to a report published on Wednesday, Jan. 14, by the Energy Industries Council (EIC).

The EIC, a trade group representing companies that supply goods and services to the global energy sector, blamed the delays on the lack of committed buyers, the high cost of enabling infrastructure such as pipelines and desalination plants, and the absence of local supply chains for key equipment.

The council tracked 78 green hydrogen projects announced across the continent in recent years, with combined investment needs estimated at around $194 billion.

The council tracked 78 green hydrogen projects announced across the continent in recent years, with combined investment needs estimated at around $194 billion. Egypt, Morocco and South Africa dominate the pipeline, accounting for roughly 80% of planned investments. The concentration reflects export strategies aimed at Europe adopted by North African countries, as well as South Africa’s stated ambition to ship green ammonia by sea to Asian markets such as Japan and South Korea.

The European energy strategy known as REPowerEU, adopted after Russia’s invasion of Ukraine, aimed to build a clean hydrogen market by 2030. It set targets for the production of 10 million tonnes of green hydrogen per year and for imports of another 10 million tonnes by the end of the decade.

While national development strategies and government-backed agreements have helped trigger a wave of announcements, the report points to a wide gap between stated ambitions and tangible progress on the ground across the continent. The overwhelming majority of planned projects remain at a very early, conceptual stage. No major project has yet reached the final investment decision stage.

Only two small-scale projects are currently operating in Africa, both located in Namibia, with a combined capacity of 17 megawatts (MW). By contrast, the cumulative capacity of projects announced across the continent totals 38 gigawatts (GW).

Only two small-scale projects are currently operating in Africa, both located in Namibia, with a combined capacity of 17 megawatts (MW). By contrast, the cumulative capacity of projects announced across the continent totals 38 gigawatts (GW).

Africa’s comparative advantages in green hydrogen production include abundant wind and solar resources, proximity to European demand centres, and growing geopolitical interest. However, several obstacles are holding projects back. Above all, companies developing the announced projects have struggled to secure long-term offtake agreements that would help support the economics of producing low-carbon fuels, given the high production costs involved.

Scaling down projects

Long-term purchase agreements are a key requirement for moving projects from the pre-FID phase to the construction phase, because they provide producers with greater certainty over future revenues. For that reason, several companies have already announced that they are pausing or suspending their projects in Africa.

The Australian group CWP Global paused development of its hydrogen and green ammonia project in Mauritania in June 2025, citing a lack of committed buyers. Known as Aman, the project was one of the largest in the world and was expected to begin production in 2029–2030. It aimed to produce up to 1.7 million tonnes of green hydrogen or 10 million tonnes of green ammonia per year. The company estimated the total investment at $40 billion.

The second major challenge facing green hydrogen projects in Africa is the high cost of building enabling infrastructure

Similarly, German energy group RWE announced in late September that it was withdrawing from the Hyphen green hydrogen derivatives project in Namibia. The $10 billion project was intended to turn the country into a major green hydrogen hub. RWE had committed to exploring the purchase of around 300,000 tonnes of green ammonia per year starting in 2027. The company said it made the decision because demand for hydrogen derivatives in Europe is growing far more slowly than expected. According to the European Hydrogen Index 2025, renewable hydrogen represented only about 0.3% of total hydrogen demand in the European Union in 2023.

The second major challenge facing green hydrogen projects in Africa is the high cost of building enabling infrastructure. This includes dedicated hydrogen pipelines, solar and wind power plants, desalination facilities, and port infrastructure. Much of that infrastructure does not yet exist in Africa. This helps explain why combined investment needs for planned green hydrogen projects are lower in Europe, at $166 billion, than in Africa, at $194 billion, even though Europe’s projected overall production capacity is much larger.

The report also highlights equipment supply constraints as another major hurdle. No electrolyser manufacturer currently operates in Africa, leaving early projects dependent on imported equipment. Egypt is an exception, after introducing a 20% local-content requirement in its industry development strategy.

No electrolyser manufacturer currently operates in Africa, leaving early projects dependent on imported equipment

To move green hydrogen projects forward in Africa, the report recommends that governments and companies shift away from very large-scale projects with production capacities of several gigawatts. These projects face a lack of secured buyers and require major enabling infrastructure that is not yet in place. Instead, the report suggests prioritising smaller, phased projects that can be delivered more quickly. Without that shift, much of the announced green hydrogen production across the continent risks remaining more aspiration than reality.

Walid Kéfi