A playbook to help Africa’s green hydrogen projects to close

From the newsletter

Africa’s green hydrogen ambitions remain high, yet most projects are struggling to reach a final investment decision. There is, however, a potential solution. A new report by the H2Global Foundation, a Germany-based non-profit that supports hydrogen market development through auction-based financing mechanisms, outlines pathways for moving projects from pipeline to bankability.

• Despite 122 green hydrogen projects having been announced across the continent, only eight have reached a final investment decision (FID), highlighting a major gap between ambition and execution.

• Unlike successful global hydrogen projects, which are anchored in domestic demand, Africa’s are largely export-oriented, exposing them to offtake risk.

More details

• According to the report, the eight green hydrogen projects in Africa that have reached final investment decision (FID) are concentrated in South Africa, Namibia, Morocco and Egypt. These include the Anglo American Mogalakwena mine and Sasolburg green hydrogen project in South Africa; the OCP Group demonstration project in Morocco; the EBIC ammonia plant (Phase 1) in Egypt; and four projects in Namibia, Oshivela DRI (Phase 1), Cleanergy Solutions Namibia HRS, Daures Green Hydrogen Village (Phase 1), and the O&L Group–CMB.TECH hydrogen hub. Notably, half of these projects are anchored in domestic offtake, primarily in clean transport applications, underscoring the importance of demand certainty in moving projects from pipeline to bankability.

• To move other projects toward this outcome, developers must first anchor hydrogen production in domestic or regional demand. Rather than relying on uncertain export markets, projects can be structured around existing industries such as fertilisers, refining, steel and transport. This directly addresses one of the sector’s biggest constraints of offtake risk. In Africa, between 76% and 89% of projects are export-oriented, compared to just 8% of successful projects globally that are export-oriented. By contrast, 92% of successful projects are anchored in domestic or regional demand, where buyers and revenue streams are clearer. 

• A second priority is to integrate the value chain. Projects should be structured so that production is directly linked to end use, with sponsors also acting as offtakers, reducing reliance on external buyers and lowering offtake risk. Globally, around 16% of successful projects follow this model. In Africa, however, this share is much lower, with just 5% in North Africa and virtually absent in sub-Saharan Africa, leaving most projects exposed to market uncertainty and weakening their bankability.

• Developers must also strengthen early-stage project development. Expanding technical assistance, feasibility funding and concessional capital at the concept and design phases is critical to moving projects from pipeline to investment-ready. Although financial support for hydrogen in Africa totals around €4 billion, only about 20% has been disbursed. Early-stage support accounts for less than 2% of total funding, despite development phases requiring between €10 million and €100 million before reaching FID. This highlights a fundamental mismatch between available capital and project needs, stalling otherwise viable projects before they can reach FID.

• Projects will also require more targeted financial de-risking instruments to attract private capital. Blended finance structures, guarantees and structured offtake agreements can help reduce perceived risk and improve bankability. This is particularly important in African markets, where higher country risk premiums and limited industrial maturity, despite strong renewable potential, drive up financing costs and constrain investment, making it harder for projects to reach FID.

Our take

• If domestic demand is what ultimately drives bankability, hydrogen development may need to be reframed less as an export opportunity and more as a tool for industrialisation, supporting sectors like fertilisers, steel and transport rather than external markets.

• Even with better project design and more targeted financing, progress will depend on improvements in regulatory clarity, permitting, and coordination across government and industry. Without this, capital alone may not be sufficient to move projects forward.