In early September, I attended the Global Africa Hydrogen Summit 2024 in Windhoek, Namibia, and followed this with a series of hydrogen-related meetings in South Africa. It was exciting to see the promise of renewable hydrogen (often referred to as green hydrogen) starting to take shape in differing ways, reflecting African countries’ national strategies and local market needs. Having participated in several global hydrogen conferences every year, I’m often dismayed by how Africa is an afterthought — praised for its potential but rarely given the spotlight it deserves. However, the Namibia summit felt refreshingly different. It had a pan-African focus and a genuine sense of progress and hope for advancing renewable hydrogen deployment in Africa. Southern Africa, in particular Namibia and South Africa, offer early insights into the diverse paths this industry might take across the continent.
Namibia’s edge
Namibia’s progress in renewable hydrogen took center stage at the summit. With vast unoccupied land, reliable sun and wind, Namibia has exceptional resources for renewable hydrogen production. Initiated under the late President Hage Geingob, the country launched a bold strategy and has maintained momentum by advancing policies and coordinating efforts across government ministries. Despite limited financial resources, a small talent pool given its population, and water scarcity — a critical input in renewable hydrogen production — Namibia is outpacing its peers in advancing large-scale, ambitious projects, and here is why:
- Good governance and lower risk profile: Ranked high in governance by the Mo Ibrahim Foundation, Namibia’s political stability makes it an attractive destination for investors. This is crucial for securing the capital needed to realize the country’s renewable hydrogen ambitions, given the substantial infrastructure investments involved.
- Full value chain and regional integration focus: Rather than just exporting hydrogen molecules, Namibia is looking to develop higher-value derivatives and goods for decarbonized industry, including green iron and green fuels. Partnering with neighboring countries, Namibia is also positioning itself as a regional center, helping southern Africa access green markets globally, especially as policies like the Carbon Border Adjustment Mechanism (CBAM), which imposes high costs on carbon intensive goods imported into Europe, take effect. As a first step, Namibia is developing a hydrogen-powered rail and hydrogen-fueled shipping industry, to provide its neighbors decarbonized transport and logistics for exporting goods to Europe.
- Leveraging partnerships and opportunity for decarbonizing shipping: Namibia is tapping into strategic partnerships with European and Asian shipping hubs, such as Port of Rotterdam and Antwerp-Bruges, to develop and pilot hydrogen-based shipping and logistics. Furthermore, instability in the Middle East has prompted companies to opt for longer, but safer routes around South Africa, positioning Namibia to capture the decarbonized shipping market as renewable hydrogen production grows.
- Oversized common-use infrastructure for national development: Namibia’s major renewable hydrogen projects, developed under the public-private partnership (PPP) framework on state-owned land, are required to oversize infrastructure like desalination plants, roads, and ports. While this may increase the costs, it leverages economies of scale for critical infrastructure investment and ensures that the benefits of a renewable hydrogen economy extend beyond the projects themselves.
South Africa’s domestic angle
South Africa provides a different kind of promising outlook. With its large economy, strong manufacturing sector, and access to global trade, South Africa offers an early glimpse into the potential for domestic use of renewable hydrogen. Most notable early signs for this positive future include:
- Enabling deregulations in the energy sector: South Africa’s ongoing energy sector deregulation has opened the door for independent power producers to invest heavily in renewables — foundational for powering a growing renewable hydrogen sector.
- Growing domestic demand: South Africa’s heavy industry and mining sector are helping drive the demand for renewable hydrogen, as they look to decarbonize and avoid potential penalties under the upcoming CBAM. Additionally, the country’s chemicals and fertilizer sectors are also helping drive demand for domestically produced renewable ammonia, in the face of severe disruptions to imports resulting from the war in Ukraine and the looming end of gas imports from Mozambique. These domestic use cases help create a local offtake market for large megawatt scale renewable hydrogen projects, with ambitions to scale to gigawatt scale as the markets mature.
- Access to domestic funding and small-scale approach: Unlike Namibia’s massive hydrogen ventures, South Africa’s initial projects are smaller in scale, supported by strong domestic demand and more dynamic capital markets. This allows projects to move more quickly and with greater certainty. As technology, domestic capacity, and the local value chains mature, South African projects foresee a rapid path to scale projects, and the renewable hydrogen industry as a whole. The South African government is also providing backing for the sector, namely through the Industrial Development Corporation, in the form of capital mobilization and policy reforms.
The shared H2urdles
But of course, Namibia, South Africa and many other African countries vying to be early movers in renewable hydrogen face some big hurdles:
- Innovation and cost challenges: While renewable hydrogen production is well understood, continued innovation is needed to scale and drive down production cost. This issue affects the entire value chain — from storage and shipping to manufacturing — where solutions are still in the early stages of development, testing and scaled deployment.
- Lack of capital and unsecured offtake: Africa continues to face global capital access challenges, compounded by real and perceived “African risk premium” and very limited local funding. Project finance for renewable hydrogen is reliant on offtake agreements, which remain elusive. Many potential uses for renewable hydrogen and the supporting infrastructure are still in development, or similarly lacking the funding to scale even in Europe and Asia, which are expected to be the primary off-takers for the African renewable hydrogen value chain exports.
- Uncertain policies and uncertain markets: Global manufacturing firms in African markets view renewable hydrogen as a key solution for decarbonization, especially with CBAM in play. However, uncertainty about CBAM’s implementation has made securing necessary capital difficult and the African hydrogen market uncertain.
Conclusion
The promise of a hydrogen-powered energy transition and decarbonization is real, but the path and scale remains clouded at best. Namibia and South Africa, though in the same region, provide valuable insights into the diverse opportunities and common challenges facing the continent. The challenges are part technological, financial , and most importantly, political, as European policymakers and the implementation of CBAM are likely to be major drivers for export-oriented African countries. Domestic use cases driven by national security needs and carbon commitments can play a critical role in priming the industry at the local level, and laying the foundation for future growth. Here also, policymakers have a critical role to play, in pushing and enforcing energy transition policies and enabling favorable investment climate. International development agencies also play a vital part — providing early capital, investing in first-of-a-kind projects, and guaranteeing offtakes. This is particularly impactful for domestic use cases, which often deliver significant developmental benefits, support climate commitments, and help African nations move up the value chain in what is expected to be a key energy sector of the future.