Funding tracker: Green hydrogen investments dip sharply

From the newsletter

Green hydrogen investment in Africa plunged in May 2025 with just one deal valued at $377 million. This is the lowest deal count and investment value this year. It sharply contrasts with April’s $40,759 million across three deals and March’s $60,877 million over eight, suggesting a slowdown in investment activity.

• Last month’s only deal went to Morocco, allowing North Africa to reclaim the lead after losing ground to southern Africa in April. 

• The downward trend, evident since March, is marked by a steady decline in both the number of deals and total funding amounts.

More details

• The only deal announced in May was a $377 million performance-based loan to Morocco’s OCP Group from France’s AFD. It broke new ground as Africa’s first green hydrogen-linked deal structured around measurable outcomes. Unlike traditional loans disbursed upfront or on timelines, this financing ties payouts to specific benchmarks: increasing clean energy and non-conventional water capacity, expanding green hydrogen and ammonia production and integrating climate and biodiversity into risk management.

• This signals a rising bar for hydrogen finance, where future disbursements may increasingly depend on verifiable progress, not just project ambition.

• A shift is also underway in funder profiles. While March and April were dominated by multilateral actors like the EU and World Bank, May saw a move toward bilateral agencies, with France’s AFD stepping in. This may reflect changing donor strategies, maturing deal pipelines, or a growing focus on results-driven funding.

• Regionally, the geographic concentration is hardening. Over the past three months, North Africa especially Egypt and Morocco and Southern Africa notably South Africa and Mozambique continue to dominate billion-dollar investments. Their sustained lead reinforces their role as Africa’s green hydrogen frontrunners, backed by policy alignment, export orientation and project readiness.

• Funding mechanisms have also evolved. March featured a mix of public loans, grants and blended finance. April introduced green bonds and May brought performance-based finance, pointing to increasingly diversified, risk-sensitive approaches that prioritise results and accountability.

• March and April saw growing investment in hydrogen-supporting infrastructure from Egypt’s $6,000 million dedicated electricity grid and transmission upgrades to Mauritania’s $82.5 million in enhanced energy systems. This reflects a growing recognition that logistics, water and energy infrastructure are critical foundations for scaling up green hydrogen.

Our take

• The sharp drop in both deal count and value may reflect growing caution among funders, especially amid rising expectations for measurable returns and clearer policy signals from governments.

• While May’s lone deal shows innovation in financing structures, it also signals a shift toward more demanding funding terms that could slow disbursement and limit access for smaller or less-prepared developers.

• With global competition heating up, Africa risks losing ground unless pipeline projects move faster toward bankability and regional frameworks better support long-term investor confidence.